Simon Kuznets

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pages: 251 words: 69,245

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality by Branko Milanovic

Berlin Wall, Branko Milanovic, colonial rule, crony capitalism, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, endogenous growth, Fall of the Berlin Wall, financial deregulation, full employment, Gini coefficient, high net worth, illegal immigration, income inequality, income per capita, Joseph Schumpeter, means of production, open borders, Pareto efficiency, plutocrats, Plutocrats, purchasing power parity, Simon Kuznets, very high income, Vilfredo Pareto, Washington Consensus, zero-sum game

Vignette 1.3 - Who Was the Richest Person Ever? Vignette 1.4 - How Unequal Was the Roman Empire? Vignette 1.5 - Was Socialism Egalitarian? Vignette 1.6 - In What Parisian Arrondissement Should You Live in the ... Vignette 1.7 - Who Gains from Fiscal Redistribution? Vignette 1.8 - Can Several Countries Exist in One? Vignette 1.9 - Will China Survive in 2048? Vignette 1.10 - Two Students of Inequality: Vilfredo Pareto and Simon Kuznets CHAPTER 2 Vignette 2.1 - Why Was Marx Led Astray? Vignette 2.2 - How Unequal Is Today’s World? Vignette 2.3 - How Much of Your Income Is Determined at Birth? Vignette 2.4 - Should the Whole World Be Composed of Gated Communities? Vignette 2.5 - Who Are the Harraga? Vignette 2.6 - The Three Generations of Obamas Vignette 2.7 - Did the World Become More Unequal During Deglobalization?

As for income distribution within nations, Pareto failed to define a theory of change in it, although “failure” is not a wholly appropriate term simply because Pareto thought, and believed to have empirically proved, that income distribution must be more or less fixed and thus that there were no laws of its “change” with development. There was, Pareto argued, only a “law of its fixity.” It wasn’t until 1955 that Simon Kuznets, a Russian-American economist and statistician, proposed the first real theory of what propels change in income distribution. (He is profiled, together with Pareto, in Vignette 1.10.) He argued—having had access to not many more data points than Pareto (although the data were of a different kind, household, not fiscal, surveys)—that inequality among people is not the same regardless of the type of society but varies predictably as society develops.

The problem with surveys, though, is that, for most developed countries, the first available surveys start only after World War II. There are some earlier and incomplete surveys from nineteenth-century England and the early-twentieth-century United States and Soviet Russia, but we can hardly speak of anything serious and usable before approximately the early 1950s. (You may recall that Pareto’s speculations were based on fiscal data, whereas Simon Kuznets had hardly a dozen surveys to draw upon—even as late as 1955.) For developing countries the situation is even worse; very often there is nothing before the 1970s or even the 1980s. This is particularly true for African nations, where household surveys developed, often with the assistance of international organizations, only in the 1980s.23 What about the two most populous countries in the world?


pages: 264 words: 76,643

The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations by David Pilling

Airbnb, banking crisis, Bernie Sanders, Big bang: deregulation of the City of London, Branko Milanovic, call centre, centre right, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, Deng Xiaoping, Diane Coyle, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, falling living standards, financial deregulation, financial intermediation, financial repression, Gini coefficient, Goldman Sachs: Vampire Squid, Google Hangouts, Hans Rosling, happiness index / gross national happiness, income inequality, income per capita, informal economy, invisible hand, job satisfaction, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, Monkeys Reject Unequal Pay, mortgage debt, off grid, old-boy network, Panopticon Jeremy Bentham, peak oil, performance metric, pez dispenser, profit motive, purchasing power parity, race to the bottom, rent-seeking, Robert Gordon, Ronald Reagan, Rory Sutherland, science of happiness, shareholder value, sharing economy, Simon Kuznets, sovereign wealth fund, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, transaction costs, transfer pricing, trickle-down economics, urban sprawl, women in the workforce, World Values Survey

How about providers of services, whose contributions to society—healthy minds (psychoanalysts), humor (clowns), education (teachers)—may be harder to count than horseshoes or bushels of wheat? In the twentieth century communist countries largely ignored services altogether. Even today we struggle to measure their economic contribution. Modern national accounts of the type used by virtually every country in the world today only really began to take shape in the 1930s. Simon Kuznets is usually credited with the invention of GDP, the quintessence of the national accounting system. But Kuznets, rather like Victor Frankenstein, soon saw his creation take on a life—and a direction—of its own. * * * — The man who is said to have invented our way of measuring growth was born in 1901 into a merchant family in the town of Pinsk in what was then part of the Russian empire.

Joshua Abramsky and Steve Drew were not bored; they were responding to a diktat from Eurostat, the statistical arm of the European Union, which wanted EU nations to standardize how they calculated national income. One of the anomalies in how countries compile their national accounts is their treatment of illegal activities, such as gambling, prostitution, and the handling of stolen goods. Simon Kuznets thought only activities that contribute to human welfare should be counted, but who was to decide what they were? He thought advertising was worthless. Perhaps someone else would judge video games a waste of time, or stop counting alcohol and cigarettes or junk food on the grounds that they are bad for one’s health. Years before, Eurostat had settled the dispute by ruling that any monetary transaction in which parties willingly consent to take part should be counted as economic activity.1 After all, in some European countries, including Holland, where prostitutes famously sit in window displays along the canals of Amsterdam, prostitution is legal.

It is also relatively prosperous by African standards, with income per capita of about $3,200 adjusted for local prices.7 Kenya follows the UN national accounts guidelines to the letter, though Ryan calls the income numbers it collects “very iffy.” Adherence to standard methodology notwithstanding, Ryan is at pains to point out that Kenya’s economic statistics are in no way comparable with those of, say, the US. “You are measuring elephants and rhubarb,” he says, conjuring up a metaphor that makes the comparison of apples and oranges seem mundane. So he has adapted the “rhubarb” methodology designed by Simon Kuznets to measure the US economy to the realities of an “elephant” economy like Kenya’s. “It’s perfectly correct for the developed world,” he says. “It makes admirable sense for the developed world. But it doesn’t necessarily transfer neatly into a developing-country context.” Kenya is a country of roughly 45 million people. Some of its elite live like New Yorkers in expensive apartments or spacious houses in gated compounds, while others live in tin shacks or mud huts, or trek the vast open spaces as nomads.


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GDP: A Brief but Affectionate History by Diane Coyle

"Robert Solow", Asian financial crisis, Berlin Wall, big-box store, Bretton Woods, BRICs, business cycle, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, hedonic treadmill, income inequality, income per capita, informal economy, Johannes Kepler, John von Neumann, Kevin Kelly, Long Term Capital Management, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, purchasing power parity, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

Clark was appointed in 1930 to provide statistics to the newly created National Economic Advisory Council, the first body ever created by the British government to provide formal economic advice. The experience of the Depression created this demand for statistics that might help the government figure out how to bring to an end the unprecedented economic slump. Across the Atlantic, in the United States, Simon Kuznets had a similar motivation. The government of Franklin Delano Roosevelt wanted a clearer picture of the state of an economy trapped in a seemingly endless depression. The National Bureau of Economic Research was requested to provide estimates of national income. Kuznets, who later won the Nobel Memorial Prize in Economic Science for this work, took on the task of developing Clark’s methods and applying them to the U.S. economy.

In a book published in 1996 I noted the phenomenon that growth in GDP for more than a decade had literally not weighed anything: all the incremental value-added growth was in intangibles of one kind or another.15 A measure of the national economy designed for tangible, physical products only is not really a good measure of an increasingly weightless economy. The lesson to draw from this discussion is that GDP is not, and was never intended to be, a measure of welfare. It measures production. As we saw in chapter 1, Simon Kuznets, one of the pioneers of national accounting, was keen to develop a measure of economic welfare. But the demands of wartime meant his ambition was overtaken by the need to measure production and productive capacity, in order to use scarce material resources and labor as efficiently as possible. If the aim instead is to develop a measure of national economic welfare, we shouldn’t be starting with GDP.

“Economists all know that, and yet their everyday use of GNP as the standard measure of economic performance apparently conveys the impression that they are evangelistic worshippers of GNP,” remark William Nordhaus and James Tobin.33 Besides, whether or not the task ought to be measuring welfare rather than GDP was debated in the early years of GDP’s development, as we saw in chapter 1, and it has been debated ever since. Simon Kuznets, working on measuring national income in the 1930s, wrote: It would be of great value to have national income estimates that would remove from the total the elements which, from the standpoint of a more enlightened social philosophy than that of an acquisitive society represent dis-service rather than service. Such estimates would subtract from the present national income totals all expenses on armament, most of the outlays on advertising, a great many of the expenses involved in financial and speculative activities, and what is perhaps most important, the outlays that have been made necessary in order to overcome difficulties that are, properly speaking, costs implicit in our economic civilization.


pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

Affordable Care Act / Obamacare, Bernie Madoff, Black Swan, British Empire, business cycle, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, means of production, Naomi Klein, Nelson Mandela, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, source of truth, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything, in short, except that which makes life worthwhile. Like many before and after him—including the GNP’s creator, Simon Kuznets—Senator Robert Kennedy believed there was something profoundly wrong with the way we calculate our national wealth and with the numbers we produce to do so, such as the GNP and the Gross Domestic Product (GDP). As Kennedy pointed out, these numbers generate alarming anomalies: in their parlance cigarette advertising is worth more than the health of a child. And yet today, forty years after Kennedy’s call for their revision, these numbers continue to rule the policy decisions of governments, financial institutions, corporations and communities.

With the crash of the New York Stock Exchange in October 1929 the laissez-faire principles that had guided government approaches to national economic affairs in the nineteenth century suddenly lost their lustre. Over the next four years in the United States, 11,000 banks failed, production collapsed by more than a half and unemployment soared, peaking at 13 million or nearly one-quarter of the workforce. At sea in their attempts to develop a coherent response to the crisis, the administrations of Herbert Hoover and then Franklin Delano Roosevelt commissioned Russian-born economist Simon Kuznets to develop comprehensive estimates of the income of the United States to guide their policies. In March 1933, Roosevelt succeeded Hoover as US president and immediately implemented his ‘Hundred Days’: ‘a presidential barrage of ideas and programmes unlike anything known to American history’. The following year, in May 1934, the British economist John Maynard Keynes went to America to see the New Deal in action.

And they were mere guesses: there was no systematic collection of information on national production by governments or any other institution. It was not until the depression of the 1930s that the idea of looking at a national economy in terms of accounting became widespread and the first attempts were made to calculate not just a nation’s income but also its expenditure. The first official measure of the overall US economy—measures of national savings, consumption and investment—was devised by Simon Kuznets and his colleagues in the 1930s to provide policymakers with a comprehensive picture of what was going on. No comprehensive measures of national income and output had existed before then. It was the Depression that raised the need for national accounts such as the Gross Domestic Product (GDP)—or, as economist William D. Nordhaus said in 2010: ‘If you want to know why GDP matters, you can just put yourself back in the 1930s period, where we had no idea what was happening to our economy.’


pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, George Santayana, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Future of Employment, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

Susan Steed and Helen Kersley, “A Bit Rich: Calculating the Real Value to Society of Different Professions,” New Economics Foundation (December 14, 2009). http://www.neweconomics.org/publications/entry/a-bit-rich 29. Kevin Kelly, “The Post Productive Economy,” The Technium (January 1, 2013). http://kk.org/thetechnium/2013/01/the-post-produc 30. Simon Kuznets, “National Income, 1929-1932,” National Bureau of Economic Research (June 7, 1934). http://www.nber.org/chapters/c2258.pdf 31. Coyle, p. 14. 32. Simon Kuznets, “How to Judge Quality,” The New Republic (October 20, 1962). 9 Beyond the Gates of the Land of Plenty 1. OECD, “Aid to developing countries rebounds in 2013 to reach an all-time high” (April 8, 2014). http://www.oecd.org/newsroom/aid-to-developing-countries-rebounds-in-2013-to-reach-an-all-time-high.htm 2.

It was obvious that the homeless population was growing and that companies were going bankrupt left and right, but as to the actual extent of the problem, nobody knew. A few months earlier, President Hoover had dispatched a number of Commerce Department employees around the country to report on the situation. They returned with mainly anecdotal evidence that aligned with Hoover’s own belief that economic recovery was just around the bend. Congress wasn’t reassured, however. In 1932, it appointed a brilliant young Russian professor by the name of Simon Kuznets to answer a simple question: How much stuff can we make? Over the next few years, Kuznets laid the foundations of what would later become the GDP. His initial calculations caused a flurry of excitement and the report he presented to Congress became a national bestseller (itself adding to the GDP, one 20-cent copy at a time). Soon, you couldn’t switch on the radio without hearing about “national income” this or “the economy” that.

“The GDP and related data are like beacons that help policymakers steer the economy toward the key economic objectives.”21 At the start of the 20th century the U.S. government employed a grand total of one economist; more accurately, an “economic ornithologist,” whose job was to study birds. Less than 40 years later, the National Bureau of Economic Research payrolled some 5,000 economists, in the sense that we use the word. These included Simon Kuznets and Milton Friedman, ultimately two of the century’s most important thinkers.22 All across the world, economists began to play a dominant role in politics. Most were educated in the United States, the cradle of the GDP, where practitioners pursued a new, scientific brand of economics revolving around models, equations, and numbers. Lots and lots of numbers. This was a completely different form of economics to what John Maynard Keynes and Friedrich Hayek had learned at school.


pages: 296 words: 82,501

Stuffocation by James Wallman

3D printing, Airbnb, back-to-the-land, Berlin Wall, big-box store, Black Swan, BRICs, carbon footprint, Cass Sunstein, clean water, collaborative consumption, commoditize, creative destruction, crowdsourcing, David Brooks, Fall of the Berlin Wall, happiness index / gross national happiness, hedonic treadmill, high net worth, income inequality, Intergovernmental Panel on Climate Change (IPCC), James Hargreaves, Joseph Schumpeter, Kitchen Debate, Martin Wolf, mass immigration, McMansion, means of production, Nate Silver, Occupy movement, Paul Samuelson, post-industrial society, post-materialism, Richard Florida, Richard Thaler, sharing economy, Silicon Valley, Simon Kuznets, Skype, spinning jenny, The Signal and the Noise by Nate Silver, Thorstein Veblen, Tyler Cowen: Great Stagnation, World Values Survey, Zipcar

Source: various histories of the Great Depression, including The Econ Review (www.econreview.com). “Unemployment soared to 25% in the UK” Source: Stephen Constantine, Unemployment in Britain Between the Wars (London: Longman, 1980). “30% unemployed in Australia” Source: Australian government figures. Simon Kuznets Read more about the rise of economics and the life of Simon Kuznets in Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Simon Kuznets et al., National Income, 1929-32 (NBER, June 1934). “As recently as the late 19th century, economics was considered of such little importance that at Oxford University, for example, there was only one part-time lecturer, and at American universities it was merely one section of one segment of an entire course” Sources: Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Gerard M Koot, English Historical Economics, 1870-1926 : The Rise of Economic History and Neomercantilism (Cambridge: Cambridge University Press, 1987).

It was like asking a general to deploy his troops without knowing the lay of the land or where the enemy was, or where reinforcements were needed, and how many. How could any leader make plans when he could not see the whole picture? So the US senate commissioned a private enterprise called the National Bureau of Economic Research (NBER), which had been collecting records for some time, to create a set of national income accounts. The lead researcher on the project was a man by the name of Simon Kuznets. Born in Pinsk in what was then Russia in 1901, Kuznets had briefly served as a statistician in Odessa in the Ukraine. He had arrived in the US in 1922. He had distinguished himself, so far, only at Columbia University. He was about to create his magnum opus. It is hard for us to imagine economics as anything other than what it is today – a central consideration of our lives. But as recently as the late 19th century, economics was considered of such little importance that at Oxford University, for example, there was only one part-time lecturer, and at American universities it was merely one section of one segment of an entire course – moral philosophy, which was then only taught by ordained ministers.

Is Experientialism the Answer to Stuffocation? Ron Inglehart Again, Ron Inglehart, “The Silent Revolution in Europe: Intergenerational Change in Post-Industrial Societies”, American Political Science Review Vol. 65, No. 4, December 1971. To see the shift away from materialistic values, see the World Values Survey (www.worldvaluessurvey.org). The changing make-up of our economy Compare the type of items in Simon Kuznets, National Income, 1929-32 (Cambridge, MA: NBER, June 1934) with those in today’s economies. Consider also, Francisco J Buera and Joseph P Kaboski. “The Rise of the Service Economy”, American Economic Review Vol. 102, No. 6, 2012. For an easy introduction, see the video infographic “The iPhone Economy” at www.nytimes.com. For the definitive text on consuming fewer materials, read Chris Goodall, “Peak Stuff”, Carbon Commentary, 2011.


The State and the Stork: The Population Debate and Policy Making in US History by Derek S. Hoff

"Robert Solow", affirmative action, Alfred Russel Wallace, back-to-the-land, British Empire, business cycle, clean water, creative destruction, David Ricardo: comparative advantage, demographic transition, desegregation, Edward Glaeser, feminist movement, full employment, garden city movement, George Gilder, Gunnar Myrdal, immigration reform, income inequality, income per capita, invisible hand, Jane Jacobs, John Maynard Keynes: technological unemployment, Joseph Schumpeter, labor-force participation, manufacturing employment, mass immigration, New Economic Geography, new economy, old age dependency ratio, Paul Samuelson, peak oil, pensions crisis, profit motive, Ralph Waldo Emerson, road to serfdom, Ronald Reagan, Scientific racism, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, trickle-down economics, urban planning, urban sprawl, wage slave, War on Poverty, white flight, zero-sum game

Norton, 1973), he wrote, “That modern economic growth meant a strikingly accelerated rise not only in product per capita but also in population does not imply that the latter was a necessary condition for the former” (2). 119. Simon Kuznets, Six Lectures on Economic Growth (New York: Free Press of Glencoe, 1959), 37. The next year, Kuznets suggested that larger populations 298 notes to chapter four happily produce more geniuses (“Population Change and Aggregate Output,” in Demographic and Economic Change in Developed Countries [Princeton: Princeton University Press, 1960], 324–39). 120. Simon Kuznets, “Toward a Theory of Economic Growth,” in National Economic Welfare at Home and Abroad, ed. Robert Lekachman (Garden City, N.Y.: Doubleday, 1955; New York: Russell & Russell, 1961), 23. 121. Osborn, “Summary of VII Ad Hoc Meeting,” 6.

The US should have a population policy authoritative enough to be quotable.”112 Frank Notestein, director of the Princeton Office of Population Research, told Osborn, “It does seem wise to have meetings devoted to problems of the United States for their intrinsic merits and for the fact that it is wise from a public relations point of view.”113 But the largest factor in the Population Council’s growing desire to address domestic issues was the Baby Boom; and the goal was to measure the applicability of the consequences of population growth in the developing world to the United States’ own demographic expansion. The committee members began with an anti–population growth bias.114 But for the first meeting they fielded papers from several influential population experts with a wide range of views: Spengler; Arnold Harberger, a University of Chicago economist; Simon Kuznets, one of the giants of twentieth-century economics; geochemist Harrison Brown; Ansley Coale of Coale-Hoover fame; and Theodore Schultz, an agricultural economist about to relocate to the University of Chicago and emerge as a leading human capital theorist. Spengler, Brown, and Coale represented the pessimists. Coale was a couple of years away from publishing Population Growth and Economic Development in Low-Income Countries, and at the Population Council meeting he articulated the thesis of that forthcoming work while applying it to the United States.

He recalled in his memoirs, “I believed that rapid population growth was the main obstacle to the world’s economic development and one of the two main threats to humankind (nuclear war being the other).”44 Simon’s first article on population, drawing on an earlier focus on the economics of advertising, recommended methods for marketing family planning programs in the developing world.45 Almost immediately after joining the population movement, however, Simon’s views shifted 180 degrees to a full rejection of Malthusianism. Simon’s about-face came partly from studying the historical analyses of Simon Kuznets, Richard Easterlin, and others who noted the absence of a strict relationship between population and economic growth, as well as the work of the agricultural and resource economists Ester Boserup, Theodore Schultz, Harold Barnett, and Chandler Morse. Simon’s main epiphany, however, came during a 1969 trip to Washington, D.C., ironically to visit USAID to discuss family planning programs. Seeing a road sign for the Iwo Jima Memorial, Simon remembered a eulogy by a chaplain who had wondered how many geniuses had unnecessarily perished at that battle.


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Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic

"Robert Solow", Asian financial crisis, assortative mating, Berlin Wall, bitcoin, Black Swan, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial exploitation, colonial rule, David Ricardo: comparative advantage, deglobalization, demographic transition, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, invisible hand, labor-force participation, liberal capitalism, low skilled workers, Martin Wolf, means of production, mittelstand, moral hazard, Nash equilibrium, offshore financial centre, oil shock, open borders, Paul Samuelson, place-making, plutocrats, Plutocrats, post scarcity, post-industrial society, profit motive, purchasing power parity, Ralph Nader, Second Machine Age, seigniorage, Silicon Valley, Simon Kuznets, special economic zone, stakhanovite, trade route, transfer pricing, very high income, Vilfredo Pareto, Washington Consensus, women in the workforce

The second component deals with income gaps between the United States and Mexico, Spain and Morocco, and so on for all countries in the world. In Chapter 2 we consider within-nation inequalities, and in Chapter 3, among-nation inequalities. In Chapter 2, I use long-term historical data on income inequality, going back in some cases to the Middle Ages, to reformulate the Kuznets hypothesis, the workhorse of inequality economics. This hypothesis, formulated by Nobel Prize–winning economist Simon Kuznets in the 1950s, states that as countries industrialize and average incomes grow, inequality will at first increase and then decrease, resulting in an inverted-U-shaped curve when one plots inequality level against income. The Kuznets hypothesis has recently been found wanting because of its inability to explain a new phenomenon in the United States and other rich countries: income inequality, which had been decreasing through much of the twentieth century, has recently been on an upswing.

We see that their wealth increased from 1987 to 2013, relative to global GDP. Data source: Author’s calculations from various Forbes lists. 2 Inequality within Countries Introducing Kuznets Waves to Explain Long-Term Trends in Inequality The long swings in income inequality must be viewed as part of a wider process of economic growth and interrelated with similar movements in other elements. —SIMON KUZNETS The Origins of Dissatisfaction with the Kuznets Hypothesis Dissatisfaction with the Kuznets hypothesis—the idea that inequality is low at very low income levels, then rises as the economy develops, and eventually falls again at high income levels—is not new, but recent developments seem to have delivered it a coup de grâce. While previous disenchantments had much to do with the failure to see an upswing of inequality in cross-sectional data, that is, when one moves from very poor countries to those slightly less poor, or with not finding such upswings in the historical experience of individual countries, the real blow was administered by a much graver issue on which the data are very clear: the recent increase in income inequality in the rich world.

Fourth, there is a tension between the concept of development that stresses the development of people within their own countries and a broader concept of development that focuses on the betterment of an individual’s position regardless of where he or she lives. We need to dispose of one fallacy, however, before we move on to discuss these four tensions. The fallacy is the view that the reduction of absolute poverty worldwide would somehow alleviate or even eliminate these tensions. Simon Kuznets dismissed this idea long ago (in 1954). Huge gaps in income and standard of living between, for example, a New Yorker and a member of a tribe in the Amazon render any meaningful contact and comparison of ways of life between them impossible. But large income gaps, that is income gaps smaller than what we called “huge” in the previous sentence, between peoples who belong to the same civilizational circle and interact with each other—which today includes practically everybody in the world—make political tensions worse: “Since it is only by contact that recognition and tension are created … the reduction of physical misery [in underdeveloped countries] … permit[s] an increase rather than a diminution of political tensions” (Kuznets [1958] 1965, 173–174).


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The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It by Timothy Noah

assortative mating, autonomous vehicles, blue-collar work, Bonfire of the Vanities, Branko Milanovic, business cycle, call centre, collective bargaining, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, easy for humans, difficult for computers, Erik Brynjolfsson, Everybody Ought to Be Rich, feminist movement, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, Gunnar Myrdal, income inequality, industrial robot, invisible hand, job automation, Joseph Schumpeter, longitudinal study, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, Paul Samuelson, performance metric, positional goods, post-industrial society, postindustrial economy, purchasing power parity, refrigerator car, rent control, Richard Feynman, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, Stephen Hawking, Steve Jobs, The Spirit Level, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, union organizing, upwardly mobile, very high income, Vilfredo Pareto, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

Upon retiring from NYU in 1945, King became chairman of the Committee for Constitutional Government, an anti–New Deal organization originally founded to oppose Roosevelt’s 1937 court-packing scheme, which outraged King. Well before he died in 1962 at age eighty-two, King saw his legacy eclipsed by the work of a Russian émigré who in 1927 had succeeded King at the NBER and in 1971 would win the Nobel Prize in economics. His name was Simon Kuznets, and among his many lasting contributions to economics was the creation of the analytic foundation for the study of income inequality. Kuznets had (and continues to have) legions of admirers in the economics profession. King was not one of them. In a 1940 letter to one of the NBER’s directors, King quarreled with what he termed Kuznets’s “assumption … that environment and luck are the principal determinants of a persons [sic] success or failure in life.”

Sampling is very useful when you’re measuring extremely large populations; that’s why demographers are forever recommending that the Census Bureau’s much better-known project, the decennial census, quit trying to count every last American—a method that’s bound to miss some hard-to-find people—and instead conduct a scientifically rigorous sampling, which would be more accurate. But sampling becomes a lot less accurate when you’re measuring trends within a very small subgroup of the larger population. And the proportion of households with annual incomes above $1 million is well under 1 percent.1 Rather than rely on the Current Population Survey for broad-brush data about the rich, Piketty and Saez did what Simon Kuznets had done prior to his groundbreaking 1954 analysis of U.S. income distribution. They looked at data from the Internal Revenue Service. Except perhaps for a very few criminals who possess a superhuman ability to hide enormous quantities of cash, everyone in the United States who makes $1 million or more files a yearly tax return, and the IRS keeps track of precisely how much each of these people rakes in.

Very civilized men can all become equal because they all have at their disposal similar means of attaining comfort and happiness. Between these two extremes is found inequality of condition, wealth, knowledge—the power of the few, the poverty, ignorance and weakness of all the rest.” 16. In fairness to Kuznets, he himself characterized his income-inequality theory as “5 percent empirical information and 95 percent speculation, some of it possibly tainted by wishful thinking.” 17. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (Mar. 1955), 1–28. 18. Steven R. Weisman, The Great Tax Wars (New York: Simon & Schuster, 2002), 353. 19. Claudia Goldin and Robert Margo, “The Great Compression: The Wage Structure in the United States at Mid-Century,” Quarterly Journal of Economics 107, issue 1 (Feb. 1992), 1–34. 20. The factory workers were all in New York State. 21.


pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, plutocrats, Plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Sam Peltzman, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

Vernon argues that government spending did not end the Depression, but rather, tight monetary and fiscal policies increased investor confidence.79 Historian Robert Higgs argues that the war should not be seen as raising the general standard of living, since 22 percent of the (male) labor force was mobilized into the military—many by conscription. Being drafted took away male workers’ freedom of choice, forcing them into low-paid employment as soldiers. They were replaced by teenagers, retired workers, women, and members of minority groups. This sent the overall unemployment rate to 1.4 percent, but, Higgs argued, resulted in less comfort and happiness overall. Economist Simon Kuznets pointed out that during World War II, much was spent on war materiel and that war goods do not improve the well-being of Americans, but rather, in moments of existential crisis, make it possible for well-being to exist at all. Kuznets argued that many military products should not even be counted as part of the gross national product (GNP), and of course, to exclude military products from GNP would show a shrinking American productivity during wartime.

Murrow and show producer Fred Friendly gave little sense of what might concretely be done to improve the living conditions of the migrants or the educational prospects of their children, gesturing vaguely in the direction of farmworkers’ unions while at the same time acknowledging the extreme imbalance of power between the migrants and their farm employers. Harvest of Shame was part of a larger discourse about hidden poverty and the costs of economic inequality that emerged in the late Eisenhower administration and then grew louder in the 1960s. In 1962, the historian Gabriel Kolko published Wealth and Power in America. The economist Simon Kuznets had claimed that income in the United States necessarily would become more evenly distributed over time. Kolko attacked Kuznets with a statistical analysis demonstrating that Americans in fact had a remarkable lack of upward mobility. Kolko pointed out that large numbers of Americans could not afford medical expenses nor even to replace their clothing. He argued that the flagship social support program, Social Security, had been originally underfunded with the “Victorian virtue of thrift” in mind; it was meant to provide a substandard lifestyle.

Erik Sherman, “America Is the Richest, and Most Unequal, Country,” Fortune, September 30, 2015, available online at http://fortune.com/2015/09/30/america-wealth-inequality/, accessed April 2, 2016. 19. Shammas, “A New Look,” 420. 20. Williamson and Lindert, “Three Centuries of American Inequality,” 11, 15, 20. 21. Mark W. Frank, “Inequality and Growth in the United States: Evidence from a New State-Level Panel of Income Inequality Measures,” Economic Inquiry vol. 47 no. 1 (2009): 55–68. 22. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review vol. 45 no. 1 (1955): 1–30. 23. Milanovic, Haves and Have-Nots, 91. 24. Williamson and Lindert, “Three Centuries of American Inequality,” 56, 59; Jeffrey Williamson and Peter H. Lindert, American Inequality: A Macroeconomic History (New York: Academic Press, 1980), 258. 25. Williamson and Lindert, American Inequality, 8. CHAPTER 1 1.


pages: 585 words: 151,239

Capitalism in America: A History by Adrian Wooldridge, Alan Greenspan

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, agricultural Revolution, air freight, Airbnb, airline deregulation, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, barriers to entry, Berlin Wall, Bonfire of the Vanities, Bretton Woods, British Empire, business climate, business cycle, business process, California gold rush, Charles Lindbergh, cloud computing, collateralized debt obligation, collective bargaining, Corn Laws, corporate governance, corporate raider, creative destruction, credit crunch, debt deflation, Deng Xiaoping, disruptive innovation, Donald Trump, edge city, Elon Musk, equal pay for equal work, Everybody Ought to Be Rich, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, fixed income, full employment, George Gilder, germ theory of disease, global supply chain, hiring and firing, income per capita, indoor plumbing, informal economy, interchangeable parts, invention of the telegraph, invention of the telephone, Isaac Newton, Jeff Bezos, jimmy wales, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, labor-force participation, Louis Pasteur, low skilled workers, manufacturing employment, market bubble, Mason jar, mass immigration, means of production, Menlo Park, Mexican peso crisis / tequila crisis, minimum wage unemployment, mortgage debt, Myron Scholes, Network effects, new economy, New Urbanism, Northern Rock, oil rush, oil shale / tar sands, oil shock, Peter Thiel, plutocrats, Plutocrats, popular capitalism, post-industrial society, postindustrial economy, price stability, Productivity paradox, purchasing power parity, Ralph Nader, Ralph Waldo Emerson, RAND corporation, refrigerator car, reserve currency, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Sand Hill Road, savings glut, secular stagnation, Silicon Valley, Silicon Valley startup, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, supply-chain management, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, total factor productivity, trade route, transcontinental railway, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Unsafe at Any Speed, Upton Sinclair, urban sprawl, Vannevar Bush, War on Poverty, washing machines reduced drudgery, Washington Consensus, white flight, wikimedia commons, William Shockley: the traitorous eight, women in the workforce, Works Progress Administration, Yom Kippur War, young professional

The heart of MFP is innovation. MFP arises mainly from innovations applied to the inputs of capital and labor. The problem with calculating GDP and MFP over a long period is that the further back you go in time, the more difficult it is to find solid statistics. The U.S. government only began collecting systematic data on national income and product accounts in the 1930s, when it called on the expertise of Simon Kuznets of Stanford University and the National Bureau of Economic Research. For prior data, historians have to rely mainly on the decennial census, which started in the 1790s. Historians supplement official census data with scattered data on industrial production, crops, livestock, and hours worked, but, as Paul David identified, such data were not very accurate before the 1840s. Despite these limitations, a legion of economic historians has, more or less, constructed a useful statistical history of GDP, both nominal and real, for the early years of the republic (see appendix).6 We draw on that work throughout this book.

The Fed then made a desperate situation still worse in the autumn of 1931 by sharply raising interest rates in order to preserve the value of the dollar. In reflecting on this catalogue of errors, it is important to make allowance for circumstances. Policy makers still had only a hazy picture of the national economy. It took the shock of the Great Depression itself to persuade the government to employ Simon Kuznets and the National Bureau of Economic Research to prepare a comprehensive set of national income accounts. The world had never experienced anything like the Great Depression before: policy makers were sailing into a global storm without a map to guide them. At first they didn’t know how bad it was going to get. A year after the crash, many Americans thought that they were in the midst of a usual, if painful, downturn—not as bad, surely, as the sudden contraction of 1920.

Just as America’s armed forces have become bogged down in prolonged wars in both Iraq and Afghanistan, so America’s economy has become bogged down in a prolonged stagnation since 2009. The engines of America’s great prosperity machine are no longer firing as effectively as they once did. Growth in nonfarm business output per hour from 2011 to 2016 has averaged a scant 0.7 percent annually, and real GDP growth only 2.2 percent annually. Moreover, stagnation is producing a populist backlash that threatens to clog up those engines even more. Simon Kuznets once remarked, “We Americans are so used to sustained economic growth in per capita product that we tend to take it for granted—not realizing how exceptional growth of this magnitude is on the scale of human history.” People usually respond very poorly to losing something they take for granted: first they deny they’ve lost it, continuing to spend the proceeds of prosperity as if nothing has changed, and then they start ranting and raving.


pages: 403 words: 111,119

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Robert Solow", 3D printing, Asian financial crisis, bank run, basic income, battle of ideas, Berlin Wall, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, mobile money, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, Richard Thaler, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

How are interest rates determined? His list got longer but the questions never aimed higher, to encourage the students to consider the economy’s purpose. How had the GDP growth cuckoo so successfully hijacked the economic nest? The answer can be traced back to the mid 1930s – as economists were just settling upon a goalless definition of their discipline – when the US Congress first commissioned economist Simon Kuznets to devise a measure of America’s national income. The calculation he made came to be known as Gross National Product, and was based on the income generated worldwide by the nation’s residents. For the first time, thanks to Kuznets, it became possible to put a dollar value on America’s annual output and hence its income – and to compare it to the year before. That metric proved to be extremely useful, and it fell into welcoming hands.

What’s more, he argued, the steep ‘social pyramid’ that his data had repeatedly revealed must be a fixed fact of human nature, making attempts at redistribution counterproductive. The way to help the worst off was to expand the economy, he concluded, and the wealthy were best placed to make that happen.4 Converging, diverging, or ever-fixed? Debates over the likely path of income inequality raged on, but in 1955 the story took a crucial turn, quite literally. When Simon Kuznets – the brilliant inventor of national income accounting – gathered together long-run trend data on incomes in the US, UK and Germany, he was taken aback by what he found. In all three countries, income inequality measured before tax had been falling at least since the 1920s, and even possibly before the First World War. Contrary to Pareto’s static social pyramid, Kuznets believed he had uncovered a different law: a social rollercoaster ride on which income inequality first rose, then levelled out, and eventually fell again, all while the economy grew.

., Sussex: IDS, available at: http://www.ids.ac.uk/files/dmfile/Wp394.pdf 4. Persky, J. (1992) ‘Retrospectives: Pareto’s law’, Journal of Economic Perspectives 6: 2, pp. 181–192. 5. Kuznets, S. (1955) ‘Economic growth and income inequality’, American Economic Review, 45: 1, pp. 1–28. 6. Kuznets, S. (1954) Letter to Selma Goldsmith, US Office of Business Economics, 15 August 1954, Papers of Simon Kuznets, Harvard University Archives, HUGFP88.10 Misc. Correspondence, Box 4. http://asociologist.com/2013/03/21/on-the-origins-of-the-kuznets-curve/ 7. Kuznets, S. (1955) ‘Economic growth and income inequality’, American Economic Review, 45: 1, pp. 1–28. 8. Lewis, W. A. (1976) ‘Development and distribution’, in Cairncross, A. and Puri, M. (eds), Employment, Income Distribution, and Development Strategy: Problems of the Developing Countries.


pages: 242 words: 68,019

Why Information Grows: The Evolution of Order, From Atoms to Economies by Cesar Hidalgo

"Robert Solow", Ada Lovelace, Albert Einstein, Arthur Eddington, assortative mating, business cycle, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, Everything should be made as simple as possible, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, industrial cluster, information asymmetry, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, Joi Ito, New Economic Geography, Norbert Wiener, p-value, Paul Samuelson, phenotype, price mechanism, Richard Florida, Ronald Coase, Rubik’s Cube, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

The earliest models equated economic output to the ratio between an economy’s capital and labor when the economy was in equilibrium. They also modeled economic growth as the tug-of-war between an economy’s savings rate (the capital that it keeps for later use) and capital depreciation (the wear and tear that erodes capital). Robert Solow advanced the prototypical model of economic growth in the 1950s—a timely development, as the data needed to evaluate such models were just becoming available. Simon Kuznets, the Russian-born economist who fathered GDP, had finished creating the system of national accounts a couple of decades earlier, helping generate the economic metric that dominated the twentieth century.4 Solow’s model, however, did not measure up well when it was compared with empirical data. As Kuznets famously remarked in his Nobel Prize acceptance speech, “The earlier theory that underlies these measures defined the productive factors in a relatively narrow way, and left the rise in productivity as an unexplained gap, as a measure of our ignorance.”5 Kuznets’ “measure of our ignorance” is what we know technically as total factor productivity (TFP).

Kuznets originally generated the concept of gross national product (GNP), which was the official metric at the time. Gross domestic product (GDP) displaced GNP as the official metric in the 1990s. GDP considers the production of goods and services within a country. GNP considers the goods and services produced by the citizens of a country, whether or not those goods are produced within the boundaries of the country. 5. Simon Kuznets, “Modern Economic Growth: Findings and Reflections,” American Economic Review 63, no. 3 (1973): 247–258. 6. Technically, total factor productivity is the residual or error term of the statistical model. Also, economists often refer to total factor productivity as technology, although this is a semantic deformation that is orthogonal to the definition of technology used by anyone who has ever developed a technology.


pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

agricultural Revolution, air freight, back-to-the-land, British Empire, business process, carbon footprint, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, Edward Glaeser, energy security, failed state, Gini coefficient, global pandemic, Haber-Bosch Process, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, low skilled workers, mass immigration, microcredit, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population

The Encyclopedia of Life could have one expandable Web page per species, documenting all known aspects of the species: genomics, cladistics and evolution, behavior, range, abundance, ecological relations with other species, threats to survival, and so forth. CHAPTER 7: GLOBAL POPULATION DYNAMICS 159 “There doesn’t seem ”: “How to Deal with a Falling Population” The Economist 284, no. 8539 (July 28, 2007): 11. 160 Simon Kuznets and Michael Kremer: Michael Kremer, “Population Growth and Technological Change: One Million B.C. to 1990,” The Quarterly Journal of Economics 108, no. 3 (August 1993): 681–716; Simon Kuznets, “Population Change and Aggregate Output,” Demographic and Economic Change in Developed Countries (Princeton, NJ: Princeton University Press, 1960): 324–40. 177 The standard tests have: Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, 2nd edition (Cambridge, Mass.: MIT Press, 2004). 177 each country’s average annual growth rate: Initial income is expected to have a negative effect: richer countries should grow less rapidly, and poor countries more rapidly, because of the phenomenon of convergence.

THE DEBATE OVER POPULATION Economists tend to be divided into three camps: population optimists, who say that today’s population growth is good for development or is at least neutral; population pessimists, who say that population growth has already gone too far to avoid disaster; and those (including myself) who believe in the importance of spurring the demographic transition to lower fertility rates in the poorest countries. Population optimists maintain that there are no real bounds to the Earth’s population because technology can and will keep ahead of the curve. One variant of this optimism is associated with the ideas of economists Simon Kuznets and Michael Kremer, who have each argued that a larger global population will tend to bring about the very technological advances that are needed to sustain that larger population. From their viewpoint, an important part of economic advance comes from the scientific and technological discoveries of geniuses in society. These extraordinary individuals represent a small but relatively constant proportion of the population.


pages: 409 words: 125,611

The Great Divide: Unequal Societies and What We Can Do About Them by Joseph E. Stiglitz

"Robert Solow", accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Asian financial crisis, banking crisis, Berlin Wall, Bernie Madoff, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computer age, corporate governance, credit crunch, Credit Default Swap, deindustrialization, Detroit bankruptcy, discovery of DNA, Doha Development Round, everywhere but in the productivity statistics, Fall of the Berlin Wall, financial deregulation, financial innovation, full employment, George Akerlof, ghettoisation, Gini coefficient, glass ceiling, global supply chain, Home mortgage interest deduction, housing crisis, income inequality, income per capita, information asymmetry, job automation, Kenneth Rogoff, Kickstarter, labor-force participation, light touch regulation, Long Term Capital Management, manufacturing employment, market fundamentalism, mass incarceration, moral hazard, mortgage debt, mortgage tax deduction, new economy, obamacare, offshore financial centre, oil shale / tar sands, Paul Samuelson, plutocrats, Plutocrats, purchasing power parity, quantitative easing, race to the bottom, rent-seeking, rising living standards, Ronald Reagan, school vouchers, secular stagnation, Silicon Valley, Simon Kuznets, The Chicago School, the payments system, Tim Cook: Apple, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Turing machine, unpaid internship, upwardly mobile, urban renewal, urban sprawl, very high income, War on Poverty, Washington Consensus, We are the 99%, white flight, winner-take-all economy, working poor, working-age population

My “1 Percent” article suggested a new classification: almost everyone was in the same boat, but that boat was very different from that on which the 1 percent was traveling. The 99 percent’s boat was sinking, or at least not doing very well. Meanwhile, the other ship was sailing magnificently. Piketty showed that the United States was not alone: similar patterns could be seen elsewhere. Economists had misinterpreted what was happening in the aftermath of World War II. Simon Kuznets, one of the founders of our system of national accounts (by which we measure the size of the economy), who received a Nobel Prize in 1971, had suggested that after an initial period of growth, in which there was an increase in inequality, as economies became richer they became more equal. Experiences since 1980 have showed that this was not true. The conclusion that Piketty reached was thus perhaps a natural one: capitalism was characterized by a high degree of inequality.

The life chances of a child in America are today more dependent on the income and education of his parents than in many other advanced countries, including “old Europe.” Now comes Thomas Piketty, who warns us in his justly celebrated new book, Capital in the Twenty-first Century, that matters are only likely to get worse. Above all, he argues that the natural state of capitalism seems to be one of great inequality. When I was a graduate student, we were taught the opposite. The economist Simon Kuznets optimistically wrote that after an initial period of development in which inequality grew, it would begin to decline. Although data at the time were scarce, it might have been true when he wrote it: The inequalities of the 19th and early 20th centuries seemed to be diminishing. This conclusion appeared to be vindicated during the period from World War II to 1980, when the fortunes of the wealthy and the middle class rose together.

But it is important to understand the difference between developed and developing countries. In the initial stages of development, some parts of the country start to grow more than others. Almost always, development is about industrialization and urbanization; with urban incomes so much higher than those in the rural areas, early on inequality grows. But as the rural sector diminishes in importance, inequality diminishes. That’s one of the reasons that Simon Kuznets had anticipated that the widely observed increases in inequality in early stages of development would be reversed. China is so far no exception to this pattern. The United States (and increasingly other advanced countries) are. The diminution of inequality did mark the United States in the first three-fourths of the last century, but beginning with the Reagan era, matters reversed. My message to China in this article was a note of caution, especially regarding how its leaders saw the continuing transition to a market economy.


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In Defense of Global Capitalism by Johan Norberg

anti-globalists, Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, Gini coefficient, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, income per capita, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, prediction markets, profit motive, race to the bottom, rising living standards, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, union organizing, zero-sum game

This is corroborated by the fact that the connection between inequality and growth is quite clear in nondemocratic states, but not apparent in modern, liberal ones.13 But can the opposite effect also hold? Is it true that increased growth leads to greater inequality, as is widely maintained? Economists sometimes refer to ‘‘Kuznets’s inverted U-curve,’’ which is based on a 1955 article by the economist Simon Kuznets, who argued that economic growth in a society initially leads to greater inequality and only after some time to a reduction of inequality. Many have accepted this thesis as truth, and it is sometimes used to discredit the idea of growth, or at least to demand redistributive policies. Kuznets himself did not draw any such drastic conclusions. On the contrary, he declared that his article was based on ‘‘perhaps 5 percent empirical information and 95 percent speculation,’’ adding that ‘‘so long as it is recognized as a collection of hunches calling for further investigation rather than a set of fully tested conclusions, little harm and much good may result.’’14 If we follow Kuznets’s recommendation and investigate what has happened since the 1950s, we can see that his preliminary conclusion is not universally valid.

Concerning equality of assets versus equality of income, see Klaus Deininger and P. Olinto, Asset Distribution, Inequality, and Growth, World Bank Policy Research Paper no. 2375 (Washington: World Bank, 2000). For the connection with democracy, see Klaus Deininger and Lyn Squire, ‘‘New Ways of Looking at the Old Issues: Asset Inequality and Growth,’’ Journal of Development Economics 57 (1998): 259–87. 14. Simon Kuznets, ‘‘Economic Growth and Income Inequality,’’ American Economic Review 45 (March 1955): 26. 15. World Bank, Income Poverty: Trends in Inequality (Washington: World Bank, 2000), http://www.worldbank.org/poverty/data/trends/inequal.htm. The data refuting Kuznets are presented in Deininger and Squire, pp. 259–287. For a review of the research, see Arne Bigsten and Jo¨rgen Levin, Tillva¨xt, inkomstfo¨rdelning och fattigdom i u-la¨nderna (Stockholm: Globkom, September 2000), http://www.globkom.net/rapporter.phtml. 16.


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Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

"Robert Solow", Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, business cycle, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, means of production, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies, Vilfredo Pareto, zero-sum game

Only "effective demand"—a powerful new term introduced in chapter 3 of The General Theory—counts. What consumers and businesses spend determines national output. Keynes defined effective demand as aggregate output (Y), which is the sum of consumption (C) and investment (I). Hence, Y= C +1 Today we refer to Y or "aggregate effective demand," as gross domestic product (GDP). GDP is defined as the value of final output of goods and services during the year. Simon Kuznets, a Keynesian statistician, developed national income accounting in the early 1940s as a way to measure Keynes's aggregate effective demand. Keynes effectively demonstrated 10. Foster and Catchings rejected all arguments and never paid the prize money. that if savings are not invested by business, GDP does not reach its potential; recession or depression indicates a lack of effective demand.

Other free-market economists, such as Henry Hazlitt and Murray Rothbard, wrote largely from outside the profession and had marginal influence. How did Friedman almost single-handedly change the intellectual climate back from the Keynesian model to the neoclassical model of Adam Smith? After acquiring academic credentials, he focused on scholarly technical work, particularly empirical evidence to test the Keynesian model. He learned the importance of sophisticated quantitative analysis from Simon Kuznets, Wesley Mitchell, and other stars at the National Bureau of Economic Research. Friedman started teaching at Chicago in 1946, where he stayed until his official retirement in 1977. Following Frank Knight's retirement in 1955, Friedman continued the Chicago tradition and even strengthened it with an upgraded version of Irving Fisher's quantity theory of money, which he applied to monetary policy.


pages: 290 words: 76,216

What's Wrong with Economics? by Robert Skidelsky

"Robert Solow", additive manufacturing, agricultural Revolution, Black Swan, Bretton Woods, business cycle, Cass Sunstein, central bank independence, cognitive bias, conceptual framework, Corn Laws, corporate social responsibility, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, disruptive innovation, Donald Trump, full employment, George Akerlof, George Santayana, global supply chain, global village, Gunnar Myrdal, happiness index / gross national happiness, hindsight bias, Hyman Minsky, income inequality, index fund, inflation targeting, information asymmetry, Internet Archive, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labour market flexibility, loss aversion, Mark Zuckerberg, market clearing, market friction, market fundamentalism, Martin Wolf, means of production, moral hazard, paradox of thrift, Pareto efficiency, Paul Samuelson, Philip Mirowski, precariat, price anchoring, principal–agent problem, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, shareholder value, Silicon Valley, Simon Kuznets, survivorship bias, technoutopianism, The Chicago School, The Market for Lemons, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, transaction costs, transfer pricing, Vilfredo Pareto, Washington Consensus, Wolfgang Streeck, zero-sum game

The same is true of Thomas Piketty’s statistics on economic inequality, and indeed all statistical time-series.3 Time-series analysis is also a core component of econometrics – the attempt to measure statistically the relationship between two or more economic variables over time in order to estimate their future relationship, or to test and validate those in the past. Historical data join comparative data as a source for econometric studies. There has been an enormous expansion of the data base for econometrics in recent years. Examples include the many attempts to establish an empirical basis for the quantity theory of money; the long time-series developed by Simon Kuznets (1901–1985) on national income and its components to test for the consumption function; and E.F. Denison’s use of time-series to estimate relationships of key inputs (labour, capital, education, efficiency) in the growth of output.4 But as we have already argued in Chapter 5, econometrics is vastly oversold as a way of testing theories: in addition to model specification problems, as soon as you get enough observations, too much time has passed to assume conditions are stationary.

One inspiration comes from technical criticisms of what gross national product fails to measure. It is the sum of the annual market value of all final goods and services. But it excludes uncosted goods like volunteering, housework, and child-rearing and includes the costs of fighting crime, pollution, drug addiction, resource depletion, and so on. Even the father of national income statistics, Simon Kuznets, argued that ‘the welfare of a nation can scarcely be inferred from a measure of national income’.19 Some economists have suggested making ‘happiness’ rather than GNP the goal of policy. Everyone can agree, surely, that making people happier, in the sense of improving their psychological well-being, is a laudable goal. This approach draws on surveys which show that happiness is not equated with quantity of income, a phenomenon known as the ‘Easterlin Paradox’.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

"Robert Solow", accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

To summarize: he occasionally sought to make use of the best available statistics of the day (which were better than the statistics available to Malthus and Ricardo but still quite rudimentary), but he usually did so in a rather impressionistic way and without always establishing a clear connection to his theoretical argument. 9. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (1955): 1–28. 10. Robert Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70, no. 1 (February 1956): 65–94. 11. See Simon Kuznets, Shares of Upper Income Groups in Income and Savings (Cambridge, MA: National Bureau of Economic Research, 1953). Kuznets was an American economist, born in Ukraine in 1901, who settled in the United States in 1922 and became a professor at Harvard after studying at Columbia University.

But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way? These are the questions I attempt to answer in this book. Let me say at once that the answers contained herein are imperfect and incomplete. But they are based on much more extensive historical and comparative data than were available to previous researchers, data covering three centuries and more than twenty countries, as well as on a new theoretical framework that affords a deeper understanding of the underlying mechanisms.

Accumulation ends at a finite level, but that level may be high enough to be destabilizing. In particular, the very high level of private wealth that has been attained since the 1980s and 1990s in the wealthy countries of Europe and in Japan, measured in years of national income, directly reflects the Marxian logic. From Marx to Kuznets, or Apocalypse to Fairy Tale Turning from the nineteenth-century analyses of Ricardo and Marx to the twentieth-century analyses of Simon Kuznets, we might say that economists’ no doubt overly developed taste for apocalyptic predictions gave way to a similarly excessive fondness for fairy tales, or at any rate happy endings. According to Kuznets’s theory, income inequality would automatically decrease in advanced phases of capitalist development, regardless of economic policy choices or other differences between countries, until eventually it stabilized at an acceptable level.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, obamacare, offshore financial centre, oil shock, plutocrats, Plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Ronald Reagan, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

Lewis argued that the capitalist sector grows from retained earnings. He assumed that members of the capitalist sector reinvest their retained earnings. In other words, both models rely on savings, but the determinants of investment are quite different. Lewis and Solow were working within a Keynesian framework in which capital referred to the means of production: factories and machines are the prime examples. Simon Kuznets, a third Nobel Laureate in economics, also was focused on economic growth in the 1950s. Using the data available to him, he formulated what came to be called the Kuznets Curve that asserted that income inequality would first rise and then fall during economic growth. He was reacting to the declining income inequality he observed around him and a political-economic view that richer countries would choose policies that increased equality.

Right Turn: The Decline of the Democrats and the Future of American Politics. New York: Hill and Wang. Fields, Karen E., and Barbara J. Fields. 2012. Racecraft: The Soul of Inequality in American Life. New York: Verso. Fitzsimmons, Emma G., and David W. Chen. 2015. “Aging Infrastructure Plagues Nation’s Busiest Rail Corridor.” New York Times, July 26. Fogel, Robert W. 1987. “Some Notes on the Scientific Methods of Simon Kuznets.” NBER Working Paper No. 2461, December. Foner, Eric. 1988. Reconstruction: America’s Unfinished Revolution, 1863–77. New York: Harper and Row. Forsberg, Mary E. 2010. “A Hudson Tunnel That Goes One Way.” New York Times, October 27. Fortner, Michael Javen. 2015. “The Real Roots of the ’70s Drug Laws.” New York Times, September 28. Fourcade, Marion, Etienne Ollion, and Yann Algan. 2015. “The Superiority of Economists.”


pages: 207 words: 86,639

The New Economics: A Bigger Picture by David Boyle, Andrew Simms

Asian financial crisis, back-to-the-land, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delayed gratification, deskilling, en.wikipedia.org, energy transition, financial deregulation, financial exclusion, financial innovation, full employment, garden city movement, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Kickstarter, land reform, light touch regulation, loss aversion, mega-rich, microcredit, Mikhail Gorbachev, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Vilfredo Pareto, Washington Consensus, wealth creators, working-age population

We will build roads and railways, develop atomic power and help with the re-equipment and modernization of the whole of industry.’ WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 37 In fact, the idea of GDP dated back further than 1954, to the battle to rescue the world from the Great Depression, and then from Hitler. It was developed by some of the young economists around Keynes and Simon Kuznets in the USA as a way of working out the total productive power of the economy, a by-product of those techniques of investment that allowed Britain to out-produce Nazi Germany. Once the war was over, this seemed to provide the perfect scorecard for an impoverished nation: measure national success by the total amount of money that changed hands, and nothing else. As a result, the ‘growth’ has been gigantic, the technological innovations astonishing, and the living standards – if you measure them in terms of money – have shot up.

She wrote a paper for the Women and Food conference in Sydney in 1982, and submitted it for comment to Australia’s deputy chief statistician. ‘His memo of reply to me – a classic of sexist economic assumptions – was one of the major incentives to write this book,’ she wrote in the introduction. WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 39 She also discovered the lists of students who worked under the economist Simon Kuznets (who originally warned against over-reliance on growth as a measure) in the 1930s to develop national accounting in the first place, before it had become the theory of economic growth. The names were all men, but at the bottom was an important note: ‘Five clerks, all women with substantial experience and know-how, assisted importantly in this work.’ These women – all with substantial experience apparently – had become non-persons.


pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

Admiral Zheng, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low skilled workers, market clearing, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, women in the workforce, working-age population, Y2K, Yom Kippur War

All this after a decade of rule by a Labour government that, historically, would happily have burnished its redistributional credentials. THE EMERGING GAP As we have seen, growing income inequality is not confined to parts of the developed world. China has witnessed a widening gap between a growing middle class and the majority of people who still remain wrapped in poverty. Other emerging economies have also seen a growing divide between rich and poor.11 These developments are consistent with the thoughts of Simon Kuznets (1901–85), arguably the father of modern national accounts, who described the changes in the distribution of income as economies shifted from agrarian to urban societies.12 The argument is straightforward. Urban workers are more productive than their inefficient rural counterparts. As urban development lifts off, so the nation as a whole becomes more productive. The benefits initially accrue almost entirely to the urban workers.

Francis Jones, Daniel Annan and Saef Shah, ‘The distribution of household income 1977 to 2006/07’, Office for National Statistics, Economic and Labour Market Review, 2.12 (2008), pp. 18–31. 11. Some emerging economies, notably those in Latin America, have always had high levels of income inequality: political systems have allowed the middle classes to extract reasonable incomes even though rates of economic growth have often been poor. 12. Simon Kuznets, ‘Toward a theory of economic growth’. in Robert Lekachman, National Policy for Economic Welfare at Home and Abroad (Doubleday, Garden City, NY, 1955). 13. Source: UN Food and Agriculture Organization. 14. Source: Prabhu Pingali, Westernization of Asian Diets and the Transformation of Food Systems: Implications for Research and Policy, ESA Working Paper No. 04–17, Rome, September 2004. 15.


pages: 286 words: 87,168

Less Is More: How Degrowth Will Save the World by Jason Hickel

air freight, Airbnb, basic income, Bernie Sanders, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, British Empire, capital controls, cognitive dissonance, coronavirus, corporate governance, corporate personhood, COVID-19, David Graeber, decarbonisation, declining real wages, deindustrialization, dematerialisation, Elon Musk, energy transition, Fellow of the Royal Society, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, gender pay gap, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, land reform, liberal capitalism, longitudinal study, Mahatma Gandhi, Mark Zuckerberg, McMansion, means of production, meta analysis, meta-analysis, microbiome, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, out of africa, passive income, planetary scale, plutocrats, Plutocrats, quantitative easing, rent control, rent-seeking, Ronald Reagan, Scramble for Africa, secular stagnation, shareholder value, sharing economy, Simon Kuznets, structural adjustment programs, the scientific method, The Spirit Level, transatlantic slave trade, trickle-down economics, universal basic income

After all, enclosure and colonisation were ultimately backed up by the force of the state. But beginning in the early 1930s, during the Great Depression, something happened that added real fuel to these flames. The Depression devastated the economies of the United States and Western Europe, and governments found themselves scrambling for a response. In the United States, officials reached out to the economist Simon Kuznets and asked him to develop an accounting system that would reveal the monetary value of all the goods and services produced in the economy. The idea was that if you can see what is happening in the economy more clearly, you can figure out where things are going wrong and intervene more effectively. Kuznets created a metric called Gross National Product, which provided the basis for the Gross Domestic Product (GDP) metric we use today.

Does it really make sense to grow dirty things in order to get clean things? We have to be smarter than that. Over and over again, it turns out that the dominant belief in the necessity of growth is under-justified. Those who call for continued growth at the expense of ecological stability are ready to risk everything – literally – for the sake of something we don’t really even need. We need new indicators of progress – but that’s not enough When Simon Kuznets introduced the GDP metric to the US Congress back in the 1930s, he was careful to warn that it should never be used as a normal measure of economic progress. Focusing on GDP would incentivise too much destruction. ‘The welfare of a nation can scarcely be inferred from a measure of national income,’ Kuznets said. ‘Goals for more growth should specify more growth of what and for what.’ A generation later, in 1968, the US politician Robert Kennedy conveyed this same message during a speech at the University of Kansas: ‘GDP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country … it measures everything, in short, except that which makes life worthwhile.’


pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

"Robert Solow", 3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, Kickstarter, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

This proximity fostered innovation that triggered a dynamic of lower costs and further local concentration in the nations that started ahead (the North Atlantic economies and Japan). The flip side was a downward spiral in the ancient manufacturing consumption / production clusters. This industrialization of the North and deindustrialization of the South is one of the most striking aspects of Phase Three’s reversal of fortunes. As Simon Kuznets wrote in Economic Growth and Structure, “Before the nineteenth century and perhaps not much before it, some presently underdeveloped countries, notably China and parts of India, were believed by Europeans to be more highly developed than Europe.”4 During the eighteenth century, the Indian cotton textile industry was the global leader in terms of quality, production, and exports. Eighteenth-century India and China also produced the world’s highest-quality silk and porcelain.

See also Bairoch, Economics and World History (London: Harvester Wheatsheaf, 1993); and Bairoch and Richard Kozul-Wright, “Globalization Myths: Some Historical Reflections on Integration, Industrialization, and Growth in the World Economy,” Discussion Paper 113, United Nations Conference on Trade and Development, Geneva, 1996. 3. The quote comes from a speech Bismarck gave in 1879 supporting a protectionist law. Quoted in William Harbutt Dawson, Protection in Germany: A History of German Fiscal Policy during the Nineteenth Century (London: P. S. King & Son, 1904). 4. Simon Kuznets, Economic Growth and Structure: Selected Essays (London: Heinemann Educational Books, 1965). 5. Lant Pritchett, “Divergence, Big Time,” Journal of Economic Perspectives 11, no. 3, (1997): 3–17; Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, NJ: Princeton University Press, 2000). 6. Charles P. Kindleberger, “Commercial Policy between the Wars,” in Cambridge Economic History of Europe, ed.


pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

"Robert Solow", affirmative action, banking crisis, Berlin Wall, Bretton Woods, business cycle, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Arrow, Lao Tzu, liquidity trap, means of production, Mont Pelerin Society, Myron Scholes, Pareto efficiency, Paul Samuelson, Ponzi scheme, price stability, rent control, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Sam Peltzman, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thorstein Veblen, zero-sum game

Friedman got to know Mitchell and his intellectual outlook better while working for the National Bureau between 1937 and 1940 than he did during his Columbia graduate student year. At the same time, his Columbia ties deepened as a result of his greater association with Mitchell and others at the National Bureau who were affiliated with the university. Friedman lectured part-time at Columbia and associated socially with many from the Columbia crowd. At the National Bureau, Friedman served as research assistant to Columbia graduate Simon Kuznets, a Mitchell disciple, who had organized the Conference on Research in National Income and Wealth. Kuznets was one of Friedman’s last mentors, along with Burns and Jones at Rutgers, Viner and Knight at Chicago, Hotelling at Columbia, and Mitchell at the National Bureau. Kuznets impressed on Friedman the value of Mitchell’s quantitative and statistical approach. Some indication of Kuznets’s early prominence is that John Maynard Keynes referred to him in his landmark The General Theory of Employment, Interest, and Money, published in 1936.

Friedman received his Ph.D. in economics from Columbia in 1946, thirteen years after enrolling there. The delay was the result of unusual circumstances. Columbia at this time required that a candidate’s dissertation be published before the degree would be awarded. A major controversy arose with respect to Friedman’s dissertation, Income from Independent Professional Practices, which he co-wrote with Simon Kuznets of the National Bureau. Kuznets wrote a preliminary manuscript, which Friedman completely rewrote between 1938 and 1941. The study covers five professional fields, including doctors and dentists. The average income of physicians at this time exceeded that of dentists by about one-third. Friedman and Kuznets argued that the reason for this difference was in part that the American Medial Association (AMA) hindered entrance to the medical profession, restricting the supply of doctors and thereby driving their price up.


pages: 568 words: 174,089

The Power Elite by C. Wright Mills, Alan Wolfe

affirmative action, Albert Einstein, American ideology, anti-communist, Asilomar, collective bargaining, creative destruction, cuban missile crisis, desegregation, full employment, Joseph Schumpeter, long peace, means of production, Monroe Doctrine, one-China policy, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, Ronald Reagan, Simon Kuznets, Thorstein Veblen, Vilfredo Pareto

From what we know—and we know only a small part—of the legal and the illegal ways of the heavily taxed, we seriously wonder if the drop from 19.1 to 7.4 per cent is as much an illustration of how well the corporate rich have learned to keep information about their income from the government than of an ‘income revolution.’ No one, however, will ever really know. For the kind of official investigation required is not politically feasible. See Simon Kuznets, ‘Shares of Upper Income Groups in Income and Savings,’ National Bureau of Economic Research, Inc., Occasional Paper No. 35, pp. 67 and 59; and Simon Kuznets, assisted by Elizabeth Jenks, Shares of Upper Income Groups in Income and Savings (New York: National Bureau of Economic Research, Inc., 1953). For one debate over the methods employed by Kuznets by means of a different interpretation of tax data, see J. Keith Butters, Lawrence E. Thompson and Lyn L. Bollinger, Effects of Taxation: Investment by Individuals (Cambridge: Harvard University Press, 1953), especially p. 104.

If one were to include these in the 1949 returns to make them comparable with the 513 in 1929, there would be 145 million-dollar incomes in 1949. On the proportion of families with incomes of less than $2,000 in 1939, see The New York Times,’ (5 March 1952) presentation of Bureau of Census data. 9. ‘Preliminary Findings of the 1955 Survey of Consumer Finances,’ Federal Reserve Bulletin, March 1955, page 3 of reprint. 10. Simon Kuznets, an expert with tax-derived data, finds that the share in total income after taxes of the richest 1 per cent (which goes down to families earning a mere $15,000) of the population has decreased from 19.1 per cent in 1928 to 7.4 per cent in 1945; but he carefully adds: ‘It must be evident from our presentation that we encountered considerable difficulty in contructing estimates with a high degree of reliability and in unearthing data for checking the several hypotheses.’


pages: 544 words: 168,076

Red Plenty by Francis Spufford

affirmative action, anti-communist, Anton Chekhov, asset allocation, Buckminster Fuller, clean water, cognitive dissonance, computer age, double helix, Fellow of the Royal Society, John von Neumann, Kickstarter, Kitchen Debate, linear programming, market clearing, MITM: man-in-the-middle, New Journalism, oil shock, Philip Mirowski, plutocrats, Plutocrats, profit motive, RAND corporation, Simon Kuznets, the scientific method

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everhing, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962). As a useful retrospective, see Angus Maddison, ‘Measuring the Performance of a Communist Command Economy: An Assessment of the CIA Estimates for the USSR’, Review of Income and Wealth vol. 44 no. 3 (September 1998), pp. 307–23.

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everything, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962). As a useful retrospective, see Angus Maddison, ‘Measuring the Performance of a Communist Command Economy: An Assessment of the CIA Estimates for the USSR’, Review of Income and Wealth vol. 44 no. 3 (September 1998), pp. 307–23.

Bauer, Nine Soviet Portraits (Boston: MIT Press, 1965) Anthony Beevor and Luba Vinogradova, eds, A Writer at War: Vasily Grossman with the Red Army 1941–1945 (London: Harvill, 2005) Mark R. Beissinger, Scientific Management, Socialist Discipline and Soviet Power (Cambridge MA: Harvard University Press, 1988) Raissa L. Berg, Acquired Traits: Memoirs of a Geneticist from the Soviet Union, trans. David Lowe (New York: Viking Penguin, 1988) Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963) Abram Bergson, Economics of Soviet Planning (New Haven CT: Yale University Press, 1964) —, Planning and Productivity Under Soviet Socialism (New York: Columbia University Press, 1968) Isaiah Berlin, Russian Thinkers, ed. Henry Hardy and Aileen Kelly (London: Hogarth Press, 1978) Joseph Berliner, Factory and Manager in the USSR (Cambridge MA: Harvard University Press, 1957) —, The Innovation Decision in Soviet Industry (Boston: MIT Press, 1976) —, Soviet Industry from Stalin to Gorbachev: Essays on Management and Innovation (Ithaca NY: Cornell University Press, 1988) Fedor Burlatsky, Khrushchev and the First Russian Spring, translated by Daphne Skillen (London: Weidenfeld & Nicolson, 1991) Peter Carlson, K Blows Top: A Cold War Comic Interlude Starring Nikita Khrushchev, America’s Most Unlikely Tourist (New York: Public Affairs, 2009) Manuel Castells and Peter Hall, Technopoles of the World: The Making of 21st Century Industrial Complexes (London: Routledge, 1994) Manuel Castells and E.


pages: 614 words: 174,226

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

"Robert Solow", airline deregulation, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, ending welfare as we know it, financial deregulation, financial innovation, fixed income, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Growth in a Time of Debt, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Long Term Capital Management, low cost airline, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, oil shock, Paul Samuelson, Philip Mirowski, plutocrats, Plutocrats, price stability, profit motive, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Peltzman, Silicon Valley, Simon Kuznets, starchitect, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus

The government slowly expanded its role in the economy, creating a national currency and then a central bank; establishing federal regulators, first for the railroads and then for a growing range of other industries; and legislating limits on monopolies. But the government remained a small and peripheral actor. As the country sank into the Great Depression, Congress still lacked basic information about the economy. In 1932, it commissioned an estimate of the decline in economic activity; the economist Simon Kuznets reported back in January 1934 that national income had fallen by half between 1929 and 1932. The data was two years old; it still seemed precious. The government printed forty-five hundred copies of the report, and quickly sold them all.25 From the first half of the twentieth century emerged a political consensus that governments should play a much larger role in managing the economy during the second half of the twentieth century.

One remarkable feature of Taiwan’s rise to prosperity was the relatively even distribution of the new wealth. The government did not achieve this result through redistribution. Both taxing and spending were modest by the standards of developed nations. Instead, by creating a society of smallholders, and then investing in education, Taiwan provided a large share of its population with both the financial and intellectual capital that made it possible to build prosperous lives. The economist Simon Kuznets famously argued that economic growth caused inequality to rise and then fall. In Taiwan, it fell and then stayed down.113 Many economists remained convinced Taiwan was not a model for other countries. They shared the judgment offered by Larry Summers in the early 1990s, during his time as the World Bank’s chief economist: “For most developing countries, relying on imperfect markets rather than imperfect governments has a greater chance for promoting growth.”114 Friedman was not alone in insisting that Taiwan and South Korea would have grown even faster with less management.115 This judgment, however, is not shared by the Taiwanese government, which continues to manage development.

The most thorough and persuasive account of Friedman’s intellectual development is an unpublished 2018 manuscript by Edward Nelson, a Federal Reserve economist, “Milton Friedman and Economic Debate in the United States, 1932–1972,” 2018, books A and B; available at https://sites.google.com/site/edwardnelsonresearch/. 21. Friedman’s doctorate was from Columbia, not Chicago. He spent his second year of graduate studies at Columbia on a fellowship, and returned there to complete the work. His adviser was Simon Kuznets, who won a Nobel Prize for his pioneering role in the development of statistical methods for measuring national economic activity. A version of the thesis was published as Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945). Friedman’s views of the medical profession remained unchanged. He told an interviewer in 1969, “I often have fun by asking people, ‘What do you suppose is the most powerful trade union in the United States?’


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

.* The school emphasized the importance of understanding the history of how the material production system has changed, both influencing and influenced by law and other social institutions.12 The Developmentalist tradition in the modern world: Development Economics The Developmentalist tradition was advanced in its modern form in the 1950s and the 1960s by economists such as, in alphabetical order, Albert Hirschman (1915–2012), Simon Kuznets (1901–85), Arthur Lewis (1915–91) and Gunnar Myrdal (1899–87) – this time, under the rubric of Development Economics. Writing mostly about the countries on the periphery of capitalism in Asia, Africa and Latin America, they and their followers not only refined the earlier Developmentalist theories but also added quite a lot of new theoretical innovations. The most important innovation came from Hirschman, who pointed out that some industries have particularly dense linkages (or connections) with other industries; in other words, they buy from – and sell to – a particularly large number of industries.

When things started to unravel in the late 1980s, few wanted to defend a system that could now only be described as hypocritical. The most reasonable conclusion to draw from the review of various theories and empirical evidence is that neither too little nor too much inequality is good. If it is excessively high or excessively low, inequality may hamper economic growth and create social problems (of different kinds). The Kuznets hypothesis: inequality over time Simon Kuznets, the Russian-born American economist, who won one of the first Nobel Prizes in Economics (in 1971 – the first one was in 1969), proposed a famous theory about inequality over time. The so-called Kuznets hypothesis is that, as a country develops economically, inequality first increases and then decreases. This hypothesis has very strongly influenced the way in which the study of inequality has been conducted over the last half century, so it is important to know what it is about.


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Men Without Work by Nicholas Eberstadt

business cycle, Carmen Reinhart, centre right, deindustrialization, financial innovation, full employment, illegal immigration, jobless men, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labor-force participation, low skilled workers, mass immigration, moral hazard, post-work, Ronald Reagan, secular stagnation, Simon Kuznets, The Rise and Fall of American Growth, War on Poverty, women in the workforce, working-age population

6.We cannot readily calculate the corresponding proportion in 1948 because the Census Bureau online historical data series for annual CPS-based estimates of age-and sex-specific enrollments only extend back to 1961. See “School Enrollment Reports and Tables from Previous Years,” U.S. Census Bureau, http://www.census.gov/hhes/school/data/cps/previous/index.html. CHAPTER 4 1.Robert William Fogel et al., Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics (Chicago: University of Chicago Press, 2013), introduction, http://www.nber.org/chapters/c12912.pdf. 2.Dora L. Costa, “The Wage and the Length of the Work Day: From the 1890s to 1991” (working paper, National Bureau of Economic Research, Cambridge, MA, April 1998), http://www.nber.org/papers/w6504. 3.Dora L. Costa, The Evolution of Retirement: An American Economic History, 1880–1990, (Chicago: University of Chicago Press, 1998), chapter 2. 4.This upsurge also coincided with a marriage boom and a baby boom—meaning that men may not only have been more capable of entering the labor market, but more motivated to do so as well. 5.Derived from the Human Mortality Database: http:www.mortality.org. 6.


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The Great Escape: Health, Wealth, and the Origins of Inequality by Angus Deaton

"Robert Solow", Admiral Zheng, agricultural Revolution, Branko Milanovic, BRICs, British Empire, call centre, clean water, colonial exploitation, Columbian Exchange, creative destruction, declining real wages, Downton Abbey, end world poverty, financial innovation, germ theory of disease, Gini coefficient, illegal immigration, income inequality, invention of agriculture, invisible hand, John Snow's cholera map, knowledge economy, Louis Pasteur, low skilled workers, new economy, purchasing power parity, randomized controlled trial, rent-seeking, rising living standards, Ronald Reagan, Simon Kuznets, Steve Jobs, Steven Pinker, structural adjustment programs, The Spirit Level, too big to fail, trade route, very high income, War on Poverty

Top Incomes in the United States The study of income inequality was transformed by a 2003 study by two economists, Thomas Piketty, now of the Paris School of Economics, and Emmanuel Saez of the University of California at Berkeley.24 It had long been known that the data on incomes from household surveys were not very useful for looking at very high incomes; there are too few such people to show up regularly in nationally representative surveys. (Even if approached at random, they might also be less likely to answer.) Piketty and Saez greatly extended a method that had been originally used in 1953 by Nobel laureate economist Simon Kuznets, who worked with data from income-tax records.25 The rich, like everyone else, have no choice but to file tax returns, and so they are fully represented in the income-tax data. Piketty and Saez’s results have changed the way that people think about income inequality, particularly at the top of the distribution. Later studies have looked at comparable data from other countries around the world, so that we can extend these insights beyond the United States.

Lee, 1999, “Wage inequality in the United States during the 1980s: Rising dispersion or falling minimum wage,” Quarterly Journal of Economics 114(3): 977–1023. 23. Congressional Budget Office, 2011, Trends in the distribution of household income between 1979 and 2007, Washington, DC. 24. Thomas Piketty and Emmanuel Saez, 2003, “Income inequality in the United States 1913–1998,” Quarterly Journal of Economics 118(1): 1–41. 25. Simon Kuznets, 1953, Shares of upper income groups in income and saving, National Bureau of Economic Research. 26. Incomes in the Piketty-Saez analysis are taxable incomes and are incomes of tax units, not of families or of households, which would include unrelated individuals. The Congressional Budget Office income numbers quoted earlier include some of the items included in the national accounts, but not in the surveys.


pages: 409 words: 118,448

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy by Marc Levinson

affirmative action, airline deregulation, banking crisis, Big bang: deregulation of the City of London, Boycotts of Israel, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, car-free, Carmen Reinhart, central bank independence, centre right, clean water, deindustrialization, endogenous growth, falling living standards, financial deregulation, floating exchange rates, full employment, George Gilder, Gini coefficient, global supply chain, income inequality, income per capita, indoor plumbing, informal economy, intermodal, invisible hand, Kenneth Rogoff, knowledge economy, late capitalism, linear programming, manufacturing employment, new economy, Nixon shock, North Sea oil, oil shock, Paul Samuelson, pension reform, price stability, purchasing power parity, refrigerator car, Right to Buy, rising living standards, Robert Gordon, rolodex, Ronald Coase, Ronald Reagan, Simon Kuznets, statistical model, strikebreaker, structural adjustment programs, The Rise and Fall of American Growth, Thomas Malthus, total factor productivity, unorthodox policies, upwardly mobile, War on Poverty, Washington Consensus, Winter of Discontent, Wolfgang Streeck, women in the workforce, working-age population, yield curve, Yom Kippur War, zero-sum game

But as well-paid jobs began to vanish and workers found themselves running in place, desperate to maintain the material gains and upward mobility of the last quarter-century, the welfare state became as much a burden as a benefit. The state’s inability to deliver the ever-rising living standards it had promised would lead to a palpable social anger, with substantial political consequences. Why, in the postwar years, had life gotten so much better for almost everyone? The best-known answer, the one that most influenced elite opinion, was advanced by the renowned American economist Simon Kuznets. His explanation, which linked the development of an advanced industrial society to a more equitable distribution of income, became known as the Kuznets curve. Kuznets, trained as a statistician in Bolshevik Russia, fled to the United States in 1922. He studied economics at Columbia University, earning his master’s degree one year ahead of Arthur Burns, and then became a protégé of business cycle theorist Wesley Mitchell, who would also guide Burns’s career.

National Income 1929–32: Letter from the Acting Secretary of Commerce Transmitting in Response to Senate Resolution No. 220 (72nd Congress) a Report on National Income, 1929–32 (Washington, DC, 1934), 7. Gross national product was for many years the most widely followed measure of economies’ size. It has largely been supplanted by gross domestic product, a measure that excludes net income from foreign sources. 2. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45 (1955): 1–28. Kuznets acknowledged that his findings pertained to the economies of Europe, North America, and Japan, and that the distribution of income in “underdeveloped” countries might not even out in the same way. 3. The data on income distribution in this paragraph are taken from Anthony B. Atkinson and Salvatore Morelli, “Chartbook of Economic Inequality,” at www.chart-bookofeconomicinequality.com, accessed January 8, 2014.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Robert Solow", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, bank run, banks create money, Basel III, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cleantech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, margin call, Mark Zuckerberg, market bubble, means of production, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, profit maximization, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, zero-sum game

In his influential 1920 book The Economics of Welfare, Pigou further defined ‘the range of our inquiry' as being ‘restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring-rod of money'.8 On the one hand, Pigou was saying that all activities which do not really improve welfare (recall the discussion of welfare principles from Pareto discussed in Chapter 2), should be excluded from national income, even if they cost money. On the other hand, he stressed, activities which do generate welfare should be included - even if they are not paid for. In these, he included free or subsidized government services. One of Pigou's most prominent disciples was the first person to provide an estimate of the fall in national income of the United States during the Great Depression. The Belarusian-born Simon Kuznets (1901-85), a Professor of Economics at Harvard, won the Nobel Prize in Economics in 1971 for his work on national accounts. Believing that they incurred costs without adding to final economic output, Kuznets, unlike Pigou, excluded from the production boundary all government activities that did not immediately result in a flow of goods or services to households - public administration, defence, justice, international relations, provision of infrastructure and so on.9 Kuznets also believed that some household expenditure did not increase the material standard of living, but simply paid for the cost of modern life - in particular the ‘inflated costs of urban civilization', such as having to maintain a bank account, pay trade union dues or the social obligation to be a member of a club.

Businesses would buy at least some of those goods (e.g. some public services cost money) with a fee; but because they were spending more on them (than if government was not producing anything, and therefore not buying supplies from businesses), their operating surplus and value added would inevitably fall. Government's share of GDP would rise, but the absolute size of GDP would stay the same. This does, of course, run counter to Keynesian attempts to show how increases in government demand could lift GDP. Many economists made exactly this argument in the 1930s and 1940s -in particular Simon Kuznets, who suggested that only government nonmarket and free goods provided to households should be allowed to increase GDP. Nevertheless, the convention that all government spending counts as final consumption arose during the Great Depression and the Second World War, when the US needed to justify its enormous government spending (the spike in the light-grey line in Figure 8 in the early 1940s).


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Finance and the Good Society by Robert J. Shiller

Alvin Roth, bank run, banking crisis, barriers to entry, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, income inequality, information asymmetry, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

Without e ective rules one is forced to do things that one nds personally questionable to stay in business. That is why businesses set up their own self-regulatory organizations, which impose rules that are usually (though, to be sure, not always) in the public interest. But there are some who think that regulators are not doing anything of the sort. Milton Friedman, following his 1954 study with Simon Kuznets of occupational incomes and regulation, made a strongly worded argument against regulation, particularly occupational licensing, in his 1962 book Capitalism and Freedom.1 He thought regulation was little more than a cynical ploy to limit the supply of services so as to keep their prices high. Friedman’s book turned out to be very in uential, creating a measure of public distaste for regulation.

The Squam Lake Report: Fixing the Financial System. Princeton, NJ: Princeton University Press. Freud, Sigmund. 1952 [1930]. Civilization and Its Discontents, trans. Joan Reviere. The Major Works of Sigmund Freud. Chicago: William Benton / Encyclopaedia Britannica. Friedman, Milton (with Rose D. Friedman). 1962. Capitalism and Freedom. Chicago: University of Chicago Press. Friedman, Milton, and Simon Kuznets. 1945. Income from Independent Professional Practice. New York: National Bureau of Economic Research. Gale, David., and Lloyd S. Shapley. 1962. “College Admissions and the Stability of Marriage.” American Mathematical Society Monthly 69(1):9–15. Gartner, John D. 2005. The Hypomanic Edge: The Link between (a Little) Craziness and (a Lot of) Success in America. New York: Simon and Schuster. Gartzke, Erik, Quan Li, and Charles Boehmer. 2001.


The Limits of the Market: The Pendulum Between Government and Market by Paul de Grauwe, Anna Asbury

"Robert Solow", banking crisis, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, conceptual framework, crony capitalism, Erik Brynjolfsson, eurozone crisis, Honoré de Balzac, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kitchen Debate, means of production, moral hazard, Paul Samuelson, price discrimination, price mechanism, profit motive, Robert Gordon, Ronald Coase, Simon Kuznets, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, trickle-down economics, ultimatum game, very high income

The drive of so many people to reach the consumption levels of the Western world cannot be stopped. It will therefore be a very long time before the internal regulator will guide the system from the satisfaction of material requirements towards non-material needs. Meanwhile the market system sails inevitably towards its limits. Kuznets’s Dream Based on a statistical analysis of US tax data between  and , the American economist Simon Kuznets came to the remarkable conclusion in  that income inequality in the US had dropped substantially. Based on this fact, Kuznets decided that capitalism contains a law which ensures that as a country becomes richer, income inequality drops. He expressed this in what would later be called the Kuznets curve, as shown in Figure .. The horizontal axis represents income per capita, the vertical axis income inequality.


pages: 165 words: 45,129

The Economics of Inequality by Thomas Piketty, Arthur Goldhammer

"Robert Solow", affirmative action, basic income, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, conceptual framework, deindustrialization, endogenous growth, Gini coefficient, income inequality, low skilled workers, means of production, moral hazard, Pareto efficiency, purchasing power parity, Simon Kuznets, The Bell Curve by Richard Herrnstein and Charles Murray, very high income, working-age population

In the 1890s Eduard Bernstein insisted that Marx’s proletarianization thesis did not hold because the social structure was clearly becoming more diverse and wealth was spreading to ever broader segments of society. It was not until after World War II, however, that it became possible to measure the decrease in wage and income inequality in the Western countries. New predictions were soon forthcoming. The most celebrated was that of Simon Kuznets (1955): according to Kuznets, inequality would everywhere be described by an inverted U curve. In the first phase of development, inequality would increase as traditional agricultural societies industrialized and urbanized. This would be followed by a second phase of stabilization, and then a third phase in which inequality would substantially decrease. This pattern—of growing inequality in the nineteenth century followed by declining inequality after that, has been well studied in the case of the United Kingdom (Williamson, 1985) and the United States (Williamson and Lindert, 1980).


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Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

"Robert Solow", affirmative action, Albert Einstein, Bernie Madoff, British Empire, business cycle, capital controls, cleantech, cloud computing, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, George Gilder, Gunnar Myrdal, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, knowledge economy, labor-force participation, longitudinal study, margin call, Mark Zuckerberg, means of production, medical malpractice, minimum wage unemployment, money market fund, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, post-industrial society, price stability, Ralph Nader, rent control, Robert Gordon, Ronald Reagan, Silicon Valley, Simon Kuznets, skunkworks, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve, zero-sum game

Behind all that growth—much of dubious value and negligible yields—was a deepening maw of debt, largely based on inflationary expectations that would have to be fulfilled if the debt was to be repaid in a stagnant economy. Yet this expected inflation would radically erode the capital prospects of American business unless taxes on wealth were drastically reduced. In this predicament the liberal economists found it possible to sing all their same old songs. They cited Denison’s Law to show that savings rates over the centuries had maintained an even level, regardless of interest rates, although Nobel winner Simon Kuznets had widely different estimates; and the idea that interest rates do not affect savings is self-evidently false. As economists have done for centuries, the liberals speculated that the vital energy and innovative genius of capitalism were near exhaustion and that government would now have to take the lead. They spoke of loopholes and martini lunches and hunger in America. They cried of unemployment and monopoly profits and unequal distribution of wealth and income.

Jung, Carl K Kahn, Richard Kelleher, Herb Kelley, Whitmore (Nick) Kemp, Jack Kemp-Roth tax cut bill Kendrick, John Kennedy, Edward Kennedy, John F. Kenniston, Kenneth Keynes, John Maynard Keynesian school Khrushchev, Nikita Klein, Burton knowledge technocracy Kodak. See Eastman Kodak Company Ko Kolakowski, Leszek Korea Korean War Krehm, William Kristol, Irving Kroc, Ray Krugman, Paul Kudlow, Larry Kuznets, Simon Kuznets curve Kwakiutl L labor, capitalization of elasticity of Labor Department labor market, equal rights agencies and restrictions labor unions Laffer, Arthur Laffer curve and Lafferite economics Laissez-faire land. See real estate land grant agricultural colleges Lasch, Christopher lasers Latin America Latvia Lauder, Estée Law Enforcement Assistance Administration Law of mind Law of Reciprocity Left legalized aliens legislators Lehman Brothers Leibenstein, Harvey leisure Levi-Strauss, Claude Levitt, Theodore Lewis, Michael Lewis the Fourteenth Lewis, W.


Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.

Alistair Cooke, American ideology, business cycle, clean water, collective bargaining, creative destruction, credit crunch, declining real wages, endowment effect, fiat currency, fixed income, full employment, hiring and firing, income per capita, Jones Act, Joseph Schumpeter, laissez-faire capitalism, manufacturing employment, means of production, minimum wage unemployment, plutocrats, Plutocrats, post-industrial society, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, Sam Peltzman, Simon Kuznets, strikebreaker, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, transcontinental railway, union organizing, Upton Sinclair, War on Poverty, Works Progress Administration

In a different but related context, and for rather different reasons, Gary Becker verged on this perspective when he said that sunk costs are not sunk in the political sector. See "A Theory of Competition among Pressure Groups for Political Influence," Quarterly Journal of Economics 98 (Aug. 1983): 383. 7. Edward S. Herman, Corporate Control, Corporate Power (New York: Cambridge University Press, 1981), pp. 299-300. For comparative international data on the growth of government, see Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, Conn.: Yale University Press, 1966), pp. 236-239; Leila Pathirane and Derek W. Blades, "Defining and Measuring the Public Sector: Some International Comparisons," Review of Income and Wealth 28 (Sept. 1982): 261-289; Alt and Chrystal, Political Economics, pp. 199-219. 8. James T. Bennett and Manuel H. Johnson, The Political Economy of Federal Government Growth: 1959-1978 (College Station, Tex.: Center for Education and Research in Free Enterprise, 1980), pp. 70-72, citing Moses Abramovitz and Vera F.

For the Populist and Democratic platforms and Bryan's famous Cross of Gold speech, see Documents of American History, ed. Henry Steele Commager (New York: Appleton-CenturyCrofts, 1948), II, pp. 143-146, 174-180. 3. Andrew Carnegie, Triumphant Democracy: Sixty Years'March of the Republic, rev. ed. (New York: Charles Scribner's Sons, 1893), p. 494; Henry George, Progress and Poverty (New York: Modern Library, n.d.), p. 7. 4. Simon Kuznets, Capital in the American Economy, Its Formation and Financing (Princeton, N.J.: Princeton University Press, 1961), p. 64; Stanley Lebergott, "Labor Force and Employment, 1800-1960," in National Bureau of Economic Research, Conference on Research in Income and Wealth, Output, Employment, and Productivity in the United States after 1800 (New York: Columbia University Press, 1966), p. 118. 5. Robert E.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

"Robert Solow", accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Andrei Shleifer, anti-communist, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Berlin Wall, Bob Noyce, Branko Milanovic, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, credit crunch, Credit Default Swap, crony capitalism, currency peg, debt deflation, Deng Xiaoping, discovery of the americas, Donald Trump, Erik Brynjolfsson, European colonialism, eurozone crisis, falling living standards, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, Frederick Winslow Taylor, full employment, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, global supply chain, global value chain, Gordon Gekko, greed is good, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, TaskRabbit, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, Yom Kippur War, zero-sum game

Thomas Piketty, the French economist, has argued that the key equation that drives inequality is when the return on capital is higher than the economic growth rate (r>g, in his formulation). Capital in this sense means wealth; if the return from owning land, or equipment, or financial assets is greater than the growth of GDP, then the rich (who own most of the capital) will keep getting richer.27 But the trend did seem to change as industrialisation developed. British inequality peaked in around 1867 and US inequality in the early 20th century.28 Simon Kuznets, the economist who devised GDP measures (see Appendix), suggested that inequality would decline as societies became richer. More people would be educated, and would be able to take high-skilled jobs; they would also demand policies that redistributed income in their favour. The very high taxes required to finance the two world wars clearly made a dent in inequality. Britain had already imposed inheritance taxes before 1914, and some of its great country houses were requisitioned as schools or convalescent homes during the conflict.

(Port of Felixstowe) APPENDIX The numbers game The Great Depression was the biggest event in global economic history. When it struck, knowledge of the economy was very limited. The concept of gross domestic product (GDP) was not defined, let alone measured, until 1934 when it was defined as “national income”. The task of establishing a measure of national income fell to a brilliant economist named Simon Kuznets, after a US Senate committee asked him to do so. With the help of staff from the Commerce Department and the National Bureau of Economic Research, Kuznets managed to set the blueprint for national accounts in 1934 within 12 months of being handed the assignment.1 A fuller report followed in 1937. The job was immense, both conceptually and logistically. The aim of GDP is to measure the final monetary value of all goods and services produced in a given year (or quarter).


pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

Berlin Wall, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Credit Default Swap, deglobalization, deindustrialization, Doha Development Round, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial intermediation, gender pay gap, Gini coefficient, income inequality, income per capita, labor-force participation, liberal capitalism, minimum wage unemployment, offshore financial centre, open economy, Pareto efficiency, purchasing power parity, race to the bottom, Robert Gordon, Simon Kuznets, structural adjustment programs, The Spirit Level, too big to fail, very high income, Washington Consensus

What’s more, we can observe that the rise in inequality at the moment of Eastern Europe’s transition to a market economy was, in several countries, only temporary. Inequality fell once the economy had fully settled into the new regime and the mechanisms for redistributing income had been reconfigured. We don’t observe such a turnaround among the Asian giants. The Forces behind R ising Inequality 113 Globalization, Deregulation, Inequality Around sixty years ago, the U.S. economist Simon Kuznets, who had studied the evolution of inequality in several developed countries, formulated a hypothesis that would become widely influential. His idea was that in an initial stage, the process of economic development increases inequality by displacing a portion of the population from traditional occupations toward more productive, but also more heterogeneous, jobs, thus creating more inequality.


pages: 254 words: 61,387

This Could Be Our Future: A Manifesto for a More Generous World by Yancey Strickler

basic income, big-box store, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, corporate governance, Daniel Kahneman / Amos Tversky, David Graeber, Donald Trump, Doomsday Clock, effective altruism, Elon Musk, financial independence, gender pay gap, global supply chain, housing crisis, Ignaz Semmelweis: hand washing, invention of the printing press, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Nash: game theory, Joi Ito, Joseph Schumpeter, Kickstarter, Louis Pasteur, Mark Zuckerberg, medical bankruptcy, new economy, Oculus Rift, off grid, offshore financial centre, Ralph Nader, RAND corporation, Richard Thaler, Ronald Reagan, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, Snapchat, Social Responsibility of Business Is to Increase Its Profits, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Travis Kalanick, universal basic income, white flight

(This is a simplification of how GDP is calculated; you can Google the actual formula if you’re curious.) When GDP goes up, businesses, consumers, and government are spending more money than in the recent past. In economic terms, this is referred to as a growing economy. When GDP goes down, this means less money is being spent. When this happens for at least six months, this is called a recession. The person who introduced GDP to the world was an economist named Simon Kuznets. Kuznets proposed GDP after the Great Depression as a bird’s-eye view of what was happening in the economy. Within a decade it became a global standard. Today virtually all economies on Earth are measured this same way. When Kuznets proposed the metric, he pointed out some of its limitations. In the original proposal to Congress in 1934, he warned: “No income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income.


pages: 626 words: 167,836

The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

"Robert Solow", 3D printing, autonomous vehicles, basic income, Bernie Sanders, Branko Milanovic, British Empire, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, collective bargaining, computer age, computer vision, Corn Laws, creative destruction, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, desegregation, deskilling, Donald Trump, easy for humans, difficult for computers, Edward Glaeser, Elon Musk, Erik Brynjolfsson, everywhere but in the productivity statistics, factory automation, falling living standards, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, game design, Gini coefficient, Hyperloop, income inequality, income per capita, industrial cluster, industrial robot, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of movable type, invention of the steam engine, invention of the wheel, Isaac Newton, James Hargreaves, James Watt: steam engine, job automation, job satisfaction, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, labor-force participation, labour mobility, Loebner Prize, low skilled workers, Malcom McLean invented shipping containers, manufacturing employment, mass immigration, means of production, Menlo Park, minimum wage unemployment, natural language processing, new economy, New Urbanism, Norbert Wiener, oil shock, On the Economy of Machinery and Manufactures, Pareto efficiency, pattern recognition, pink-collar, Productivity paradox, profit maximization, Renaissance Technologies, rent-seeking, rising living standards, Robert Gordon, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, social intelligence, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade route, Triangle Shirtwaist Factory, Turing test, union organizing, universal basic income, washing machines reduced drudgery, wealth creators, women in the workforce, working poor, zero-sum game

In hindsight, and in the light of the gains brought by technology, it is astounding to think that economists of the early nineteenth century like Thomas Malthus and David Ricardo did not believe that technology could improve the human lot. The technological virtuosity of the nineteenth and early twentieth centuries took some time to trickle down to the economics profession. But in the 1950s, Robert Solow, who would go on to win the Nobel Prize in Economics in 1987, found that virtually all economic advance over the twentieth century had been thanks to technology. And others documented that those gains had been widely shared. Simon Kuznets found that America had become more equal and advanced his theory of capitalist development in which inequality automatically decreases along the industrialization path. Nicholas Kaldor observed that labor had consistently reaped about two-thirds of the gains of growth. And Solow developed a theoretical framework in which progress delivered equal benefits for every social group around that time.

In any event, the idea that industrialists grew rich on the misery of workers had evidently fallen out of fashion. In the 1950s, Robert Solow advanced a model of a balanced growth path, in which progress delivered equal benefits for every social group; Kaldor put forward his stylized facts of economic growth, showing that the labor share of income had remained roughly constant, at two-thirds of national income, despite rapid mechanization; and Simon Kuznets advanced his hugely optimistic theory of economic progress in which inequality automatically decreases, regardless of economic policy choices.54 Their optimism surely seemed warranted at the time. Schumpeterian growth did indeed make America both richer and more equal. Like the doomsday economists of the Industrial Revolution, however, twentieth-century economists were unfortunately fond of developing iron laws of economics that could be used to explain the trajectory of capitalist development for every time and place, though it is not hard to understand their appeal.


pages: 877 words: 182,093

Wealth, Poverty and Politics by Thomas Sowell

affirmative action, Albert Einstein, British Empire, Capital in the Twenty-First Century by Thomas Piketty, colonial exploitation, colonial rule, correlation does not imply causation, Deng Xiaoping, desegregation, European colonialism, full employment, Gunnar Myrdal, income inequality, income per capita, invention of the sewing machine, invisible hand, low skilled workers, mass immigration, means of production, minimum wage unemployment, New Urbanism, profit motive, rent control, Scramble for Africa, Simon Kuznets, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, transatlantic slave trade, transcontinental railway, trickle-down economics, very high income, War on Poverty

William Easterly, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor (New York: Basic Books, 2013), p. 79. 30. Kay S. Hymowitz, “Brooklyn’s Chinese Pioneers,” City Journal, Spring 2014, pp. 26, 27. 31. Irving Howe, World of Our Fathers, pp. 156–159; Jacob Riis, How the Other Half Lives: Studies Among the Tenements of New York (New York: Charles Scribner’s Sons, 1914), p. 125. 32. Simon Kuznets, “Immigration of Russian Jews to the United States: Background and Structure,” Perspectives in American History, Vol. IX (1975), pp. 115–116. 33. Reports of the Immigration Commission, The Children of Immigrants in Schools (Washington: Government Printing Office, 1911), Vol. I, p. 110. 34. Carl C. Brigham, A Study of American Intelligence (Princeton: Princeton University Press, 1923), p. 190. 35.

Solomon Grayzel, A History of the Jews: From the Babylonian Exile to the End of World War II (Philadelphia: The Jewish Publication Society of America, 1947), pp. 355–356, 386–394; Jonathan I. Israel, European Jewry in the Age of Mercantilism: 1550–1750 (Oxford: Clarendon Press, 1985), pp. 5, 6. 45. W. Cunningham, Alien Immigrants to England (London: Frank Cass & Co., Ltd., 1969), Chapter 6. 46. Simon Kuznets, “Immigration of Russian Jews to the United States: Background and Structure,” Perspectives in American History, Vol. IX (1975), p. 39. 47. Donald L. Horowitz, Ethnic Groups in Conflict (Berkeley: University of California Press, 1985), pp. 176–177. 48. Hugh LeCaine Agnew, Origins of the Czech National Renascence (Pittsburgh: University of Pittsburgh Press, 1993), p. 51. 49. Derek Sayer, The Coasts of Bohemia, p. 50. 50.


pages: 275 words: 77,955

Capitalism and Freedom by Milton Friedman

affirmative action, Berlin Wall, central bank independence, Corn Laws, Deng Xiaoping, floating exchange rates, Fractional reserve banking, full employment, invisible hand, Joseph Schumpeter, liquidity trap, market friction, minimum wage unemployment, price discrimination, rent control, road to serfdom, Ronald Reagan, secular stagnation, Simon Kuznets, the market place, The Wealth of Nations by Adam Smith, union organizing

The Virginia case is discussed in chapter vii. 6 The increased return may be only partly in a monetary form; it may also consist of non-pecuniary advantages attached to the occupation for which the vocational training fits the individual. Similarly, the occupation may have non-pecuniary disadvantages, which would have to be reckoned among the costs of the investment. 7 For a more detailed and precise statement of the considerations entering into the choice of an occupation, see Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 81–95, 118–37. 8 See G. S. Becker, “Underinvestment in College Education?” American Economic Review, Proceedings L (1960), 356–64; T. W. Schultz, “Investment in human Capital,” American Economic Review, LXI (1961), 1–17. 9 Despite these obstacles to fixed money loans, I am told that they have been a very common means of financing education in Sweden, where they have apparently been available at moderate rates of interest.


pages: 306 words: 78,893

After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

"Robert Solow", accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, post-work, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, zero-sum game

Real incomes across the distribution grew strongly and in parallel, -with incomes of the poorer half of the population even outgrowing those of the richer over some periods, resulting in a mild compression of the income distribution (that is, a trend toward greater equality). Of course, even at its most egalitarian postwar moment, the U.S. remained a polarized society, but it was still widely thought that something had changed to make the new arrangements permanent. In 1955, Simon Kuznets pubHshed his famous "inverted U" theory of capitalist evolution: that income inequaHty rises in the early stages of development and faUs as economies mature. Economists came to believe this as a fact of their After the New Economy .525 .500 .475 .450 .425 .4001-.375 income inequality (Cini index) U.S., 1913-2001 "science," and you still hear it from development specialists at the World Bank and in academia to excuse the vast increase in inequaUty in the Third World over the last fifteen years.


pages: 381 words: 78,467

100 Plus: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family And by Sonia Arrison

23andMe, 8-hour work day, Albert Einstein, Anne Wojcicki, artificial general intelligence, attribution theory, Bill Joy: nanobots, bioinformatics, Clayton Christensen, dark matter, disruptive innovation, East Village, en.wikipedia.org, epigenetics, Frank Gehry, Googley, income per capita, indoor plumbing, Jeff Bezos, Johann Wolfgang von Goethe, Kickstarter, Law of Accelerating Returns, life extension, personalized medicine, Peter Thiel, placebo effect, post scarcity, Ray Kurzweil, rolodex, Silicon Valley, Simon Kuznets, Singularitarianism, smart grid, speech recognition, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, Steven Levy, Thomas Malthus, upwardly mobile, World Values Survey, X Prize

Princeton economists Gene Grossman and Alan Krueger made a similar argument and were among the first to demonstrate how this works in a 1991 paper about free trade.36 They showed that, although “economic growth brings an initial phase of deterioration” in environmental quality, it is “followed by a subsequent phase of improvement.”37 Such an inverted U curve is often referred to as an environmental Kuznets curve (EKC), named after economist Simon Kuznets, who argued that as incomes rise, there is an initial phase of great inequality, which is followed later by a reduction of that inequality. This theory, which won Kuznets the Nobel Prize in 1971, works in a similar way when applied to the environment. A typical EKC looks like Figure 3.4, and the actual numbers will vary depending on the environmental problems described (air pollutants, deforestation, etc.).


pages: 309 words: 78,361

Plenitude: The New Economics of True Wealth by Juliet B. Schor

Asian financial crisis, big-box store, business climate, business cycle, carbon footprint, cleantech, Community Supported Agriculture, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, decarbonisation, dematerialisation, demographic transition, deskilling, Edward Glaeser, en.wikipedia.org, Gini coefficient, global village, IKEA effect, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Joseph Schumpeter, Kenneth Arrow, knowledge economy, life extension, McMansion, new economy, peak oil, pink-collar, post-industrial society, prediction markets, purchasing power parity, ride hailing / ride sharing, Robert Shiller, Robert Shiller, sharing economy, Simon Kuznets, single-payer health, smart grid, The Chicago School, Thomas L Friedman, Thomas Malthus, too big to fail, transaction costs, Zipcar

Cornucopians have tended to be political and polemical, extreme free marketeers who reject the science of climate change and environmental degradation. Few economists go all the way with the Cornucopians, but a larger number are believers in a more moderate variant of eco-optimism, which argues that growth itself will save the environment. Represented in a concept called the Environmental Kuznets Curve, it is modeled on studies of inequality carried out in the 1950s and ’60s by the economist Simon Kuznets. Kuznets saw a humpback data pattern across nations. At a given point in time, some had low levels of both income and inequality, some had more inequality and more income, and some had high incomes with low inequality. From this finding, most economists came to believe that countries must endure a growing concentration of income as they develop, but that once they become wealthy, they can buy themselves more fairness.


Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Pérez

agricultural Revolution, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, business cycle, capital controls, commoditize, Corn Laws, creative destruction, David Ricardo: comparative advantage, deindustrialization, distributed generation, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Hyman Minsky, informal economy, joint-stock company, Joseph Schumpeter, knowledge economy, late capitalism, market fundamentalism, new economy, nuclear winter, offshore financial centre, post-industrial society, profit motive, railway mania, Robert Shiller, Robert Shiller, Sand Hill Road, Silicon Valley, Simon Kuznets, South Sea Bubble, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, trade route, tulip mania, Upton Sinclair, Washington Consensus

Each technological revolution, then, is an explosion of new products, industries and infrastructures that gradually gives rise to a new techno-economic paradigm, which guides entrepreneurs, managers, innovators, investors and consumers, both in their individual decisions and in their interactions, for the whole period of propagation of that set of technologies. A. Five Technological Revolutions in Two Hundred Years At several moments in his thinking about development, Simon Kuznets explored the notion of epochal innovations as those capable of inducing significant changes in the direction of growth. In his Nobel lecture in 1971, he stated: The major breakthroughs in the advance of human knowledge, those that constituted the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations. And the changing course of economic history can perhaps be subdivided into economic epochs, each identified by the epochal innovation with the distinctive characteristics of growth that it generated.9 In that particular instance he was mainly referring to the epochs that lasted several centuries, of which capitalism since the first industrial revolution would 8. 9.


pages: 300 words: 76,638

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future by Andrew Yang

3D printing, Airbnb, assortative mating, augmented reality, autonomous vehicles, basic income, Ben Horowitz, Bernie Sanders, call centre, corporate governance, cryptocurrency, David Brooks, Donald Trump, Elon Musk, falling living standards, financial deregulation, full employment, future of work, global reserve currency, income inequality, Internet of things, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Khan Academy, labor-force participation, longitudinal study, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, megacity, Narrative Science, new economy, passive income, performance metric, post-work, quantitative easing, reserve currency, Richard Florida, ride hailing / ride sharing, risk tolerance, Ronald Reagan, Sam Altman, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, single-payer health, Stephen Hawking, Steve Ballmer, supercomputer in your pocket, technoutopianism, telemarketer, The Wealth of Nations by Adam Smith, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, unemployed young men, universal basic income, urban renewal, white flight, winner-take-all economy, Y Combinator

The unit of an economy is each person, not each dollar. 3. Markets exist to serve our common goals and values. There’s a saying in business that “what gets measured gets managed for.” We need to start measuring different things. The concept of GDP and economic progress didn’t even exist until the Great Depression. It was invented so that the government could figure out how bad the economy was getting and how to make it better. The economist Simon Kuznets, upon introducing the concept of GDP to Congress in 1934, remarked that “economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.”


pages: 280 words: 74,559

Fully Automated Luxury Communism by Aaron Bastani

"Robert Solow", autonomous vehicles, banking crisis, basic income, Berlin Wall, Bernie Sanders, Bretton Woods, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, computer age, computer vision, David Ricardo: comparative advantage, decarbonisation, dematerialisation, Donald Trump, double helix, Elon Musk, energy transition, Erik Brynjolfsson, financial independence, Francis Fukuyama: the end of history, future of work, G4S, housing crisis, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, James Watt: steam engine, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kuiper Belt, land reform, liberal capitalism, low earth orbit, low skilled workers, M-Pesa, market fundamentalism, means of production, mobile money, more computing power than Apollo, new economy, off grid, pattern recognition, Peter H. Diamandis: Planetary Resources, post scarcity, post-work, price mechanism, price stability, private space industry, Productivity paradox, profit motive, race to the bottom, RFID, rising living standards, Second Machine Age, self-driving car, sensor fusion, shareholder value, Silicon Valley, Simon Kuznets, Slavoj Žižek, stem cell, Stewart Brand, technoutopianism, the built environment, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, Travis Kalanick, universal basic income, V2 rocket, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, working-age population

That is, all the goods and services that are produced, sold and purchased. Given its centrality in any discussion of what kind of economic model is preferable, it’s easy to presume that the idea of GDP is as old as capitalism itself – that it was perhaps contrived by the likes of Adam Smith or David Ricardo. Yet to the contrary, it is a relatively recent development, devised by the economist Simon Kuznets in the 1930s in response to the Great Depression. It turns out that the central imperative of modern societies – that economic growth should be pursued as an end in itself – only started to reign supreme a century and a half after the Second Disruption began. Perhaps even more surprising is that scepticism of it is almost as old as the measure itself. In 1968 Robert Kennedy spoke of how GDP ‘measures everything, in short, except that which makes life worthwhile’.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

Asian financial crisis, business cycle, central bank independence, clean water, colonial rule, Corn Laws, corporate governance, creative destruction, David Ricardo: comparative advantage, fear of failure, income inequality, income per capita, joint-stock company, joint-stock limited liability company, land reform, liberal world order, moral hazard, open economy, purchasing power parity, rent-seeking, short selling, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, Washington Consensus

Ely subsequently influenced the American Institutionalist School through his disciple, John Commons.19 Ely was one of the founding fathers of the American Economic Association(AEA); to this day, the biggest public lecture at the Association's annual meeting is given in Ely's name, although few of the present AEA members would know who he was. After the Second World War, when the development of post-colonial countries became a major issue, the historical approach was deployed very successfully by many founding fathers of 'development economics'.20 The likes of Arthur Lewis, Walt Rostow and Simon Kuznets formulated their theories of the 'stages' of economic development on the basis of their extensive knowledge of the history of industrialization in developed countries.21 Also influential was the 'late development' thesis of the Russian-born American economic historian, Alexander Gerschenkron, who, drawing on European experiences of industrialization, argued that the continuously increasing scale of technology would make it necessary for countries embarking on industrialization to deploy more powerful institutional vehicles in order to mobilise industrial financing.


pages: 270 words: 73,485

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One by Meghnad Desai

"Robert Solow", 3D printing, bank run, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, Gunnar Myrdal, Home mortgage interest deduction, imperial preference, income inequality, inflation targeting, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, market bubble, market clearing, means of production, Mexican peso crisis / tequila crisis, mortgage debt, Myron Scholes, negative equity, Northern Rock, oil shale / tar sands, oil shock, open economy, Paul Samuelson, price stability, purchasing power parity, pushing on a string, quantitative easing, reserve currency, rising living standards, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, seigniorage, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, women in the workforce

These were therefore short cycles. Mitchell’s research was independently validated by the work of Joseph Kitchin (1861–1932).7 In 1923, Kitchin published his study of cycles in American and British data for 1890–1922. He found short cycles of 40 months and major cycles of between 7 and 11 years. Kitchin thus also corroborates the ten-year cycle of Juglar and Marx. Other economists such as Simon Kuznets, a Nobel Laureate, and Moses Abramovitz as well as W. Arthur Lewis, another Nobel Prize winner, discovered longer cycles of between 14 and 22 years in length. Cycles could be thus discerned in the data. But an explanation for what caused cycles remained elusive: Was it investment in house-building, or demographics? The long gestation period required for large-scale investment in steel and shipbuilding?


pages: 333 words: 76,990

The Long Good Buy: Analysing Cycles in Markets by Peter Oppenheimer

"Robert Solow", asset allocation, banking crisis, banks create money, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buy and hold, Cass Sunstein, central bank independence, collective bargaining, computer age, credit crunch, debt deflation, decarbonisation, diversification, dividend-yielding stocks, equity premium, Fall of the Berlin Wall, financial innovation, fixed income, Flash crash, forward guidance, Francis Fukuyama: the end of history, George Akerlof, housing crisis, index fund, invention of the printing press, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kickstarter, liberal capitalism, light touch regulation, liquidity trap, Live Aid, market bubble, Mikhail Gorbachev, mortgage debt, negative equity, Network effects, new economy, Nikolai Kondratiev, Nixon shock, oil shock, open economy, price stability, private sector deleveraging, Productivity paradox, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Simon Kuznets, South Sea Bubble, special economic zone, stocks for the long run, technology bubble, The Great Moderation, too big to fail, total factor productivity, trade route, tulip mania, yield curve

Interest in economic cycles, and their impact on financial markets and prices, has a long history and there are many theories on how they function. The Kitchin cycle, after Joseph Kitchin (1861–1932), is based on a 40-month duration, driven by commodities and inventories. The Juglar cycle is used to predict capital investment (Clement Juglar, 1819–1905) and has a duration of 7–11 years, whereas the Kuznets cycle for predicting incomes (Simon Kuznets, 1901–1985) has a duration of 15–25 years and the Kondratiev cycle (Nikolai Kondratiev, 1892–1938) has a duration of 50–60 years, driven by major technological innovations. There are, clearly, problems with all of them and the fact that there are so many different descriptions of cycles points to the fact that there are many different drivers. Several of them, such as the very long Kondratiev cycle, are difficult to test statistically given the existence of so few observations.


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, corporate governance, cosmological principle, crony capitalism, dark matter, declining real wages, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, Plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

However, although information on housing inequality derived from house-tax data and reported wages has been marshaled to show that incomes continued to become more unequal during the first half of the nineteenth century as well, it remains controversial how much weight this particular material can bear.26 Figure 3.4Inequality trends in Latin America in the long run This is even more true of an earlier notion that various indicators of inequality rose during the first half or two-thirds of the nineteenth century and subsequently declined until the 1910s, producing a gently inverted U-curve that would be compatible with the economist Simon Kuznets’s idea that economic modernization might first increase and then lower inequality within a society in transition. The observation that wage dispersal grew between 1815 and 1851, peaked in the 1850s and 1860s, and subsequently declined until 1911 may be an artifact of the underlying data for different professions, which exhibit contradictory trends. Similarly, measures of housing inequality constructed from house duties that suggest Ginis of 0.61 in 1830 and 0.67 in 1871 for all inhabited houses and a decline from 0.63 in 1874 to 0.55 in 1911 for private residences likewise cannot readily be taken at face value.

Considering the severity of these transformative shocks and the multifaceted nature of their effect on overall social, political, and economic development, the question of how much subsequent levels of inequality were determined by economic growth and per capita output as such would seem rather meaningless.2 In the following, I explore the contribution of economic development to income inequality in two ways: by considering claims that per capita GDP per se is systematically correlated with inequality measures and by focusing on parts of the world that were not involved in the violent dislocations from 1914 to 1945—or up to the 1970s if we include communist revolutions in Asia—or, more precisely, that were not as directly involved in them as were most rich Western countries and large parts of Asia: Africa, the Middle East, and, above all, Latin America. We owe the classic formulation of the idea that income inequality is linked to and driven by economic development to economics Nobel laureate Simon Kuznets. Back in the 1950s, Kuznets, a pioneer in the study of income disparities in the United States, proposed a deliberately simple model. Economic advances beyond the traditional agrarian mode initially raise inequality if mean incomes are higher—and perhaps also more unevenly distributed—in cities than in the countryside, and urbanization increases the urban share of the population and the weight of the urban sector in the national economy, thereby inflating income differentials and also overall inequality.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

Airbnb, barriers to entry, Bernie Madoff, bike sharing scheme, Buckminster Fuller, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, Ponzi scheme, pre–internet, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, Zipcar

Gross domestic product (GDP) allows economists to plot and compare our national economy’s growth, disparities, ranking, and power. Today the GDP of the world is a little more than $60 trillion. The United States and the European Union account for approximately one-third of this amount. The simplicity of the measurement of GDP is also its downfall. The argument against GDP fetishism is that we are more than what we make. Even the inventor of the GDP, the late Russian-American economist Simon Kuznets, was aware that the model of GDP had significant shortcomings. “The welfare of a nation can scarcely be inferred from a measure of national income,” he said in 1934. Imagine walking into a cocktail party and instead of making casual conversation everyone asked, “How much money do you make?” At the very least you would find it embarrassingly gauche, but you probably also would be somewhat offended.


pages: 472 words: 80,835

Life as a Passenger: How Driverless Cars Will Change the World by David Kerrigan

3D printing, Airbnb, airport security, Albert Einstein, autonomous vehicles, big-box store, butterfly effect, call centre, car-free, Cesare Marchetti: Marchetti’s constant, Chris Urmson, commoditize, computer vision, congestion charging, connected car, DARPA: Urban Challenge, deskilling, disruptive innovation, edge city, Elon Musk, en.wikipedia.org, future of work, invention of the wheel, Just-in-time delivery, loss aversion, Lyft, Marchetti’s constant, Mars Rover, megacity, Menlo Park, Metcalfe’s law, Minecraft, Nash equilibrium, New Urbanism, QWERTY keyboard, Ralph Nader, RAND corporation, Ray Kurzweil, ride hailing / ride sharing, Rodney Brooks, Sam Peltzman, self-driving car, sensor fusion, Silicon Valley, Simon Kuznets, smart cities, Snapchat, Stanford marshmallow experiment, Steve Jobs, technoutopianism, the built environment, Thorstein Veblen, traffic fines, transit-oriented development, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Unsafe at Any Speed, urban planning, urban sprawl, Yogi Berra, young professional, zero-sum game, Zipcar

There wasn't legal protection for the Wright brothers when they made that first plane. They made them, they went out there, and society eventually realized its value." Chapter 8 - The Driverless Dividend “The major breakthroughs in the advance of human knowledge, those that constitute the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations” Simon Kuznet’s Nobel lecture, 1971 The course of human civilization has been shaped by transportation for millennia. The Romans would not have expanded across Europe without the paved roadway, the Mongols could not have conquered Asia without the horse, America would not have grown inexorably without the train, and modern trade would not be possible without container ships and jet airliners. Our modes of movement empower us.


pages: 304 words: 80,143

The Autonomous Revolution: Reclaiming the Future We’ve Sold to Machines by William Davidow, Michael Malone

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, agricultural Revolution, Airbnb, American Society of Civil Engineers: Report Card, Automated Insights, autonomous vehicles, basic income, bitcoin, blockchain, blue-collar work, Bob Noyce, business process, call centre, cashless society, citizen journalism, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, cryptocurrency, disintermediation, disruptive innovation, distributed ledger, en.wikipedia.org, Erik Brynjolfsson, Filter Bubble, Francis Fukuyama: the end of history, Geoffrey West, Santa Fe Institute, gig economy, Gini coefficient, Hyperloop, income inequality, industrial robot, Internet of things, invention of agriculture, invention of movable type, invention of the printing press, invisible hand, Jane Jacobs, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, license plate recognition, Lyft, Mark Zuckerberg, mass immigration, Network effects, new economy, peer-to-peer lending, QWERTY keyboard, ransomware, Richard Florida, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Simon Kuznets, Snapchat, speech recognition, Stuxnet, TaskRabbit, The Death and Life of Great American Cities, The Rise and Fall of American Growth, the scientific method, trade route, Turing test, Uber and Lyft, uber lyft, universal basic income, uranium enrichment, urban planning, zero day, zero-sum game, Zipcar

Suppose you do not have to visit the doctor as often because a virtual doctor takes care of you. Suppose low-cost virtual travel substitutes for going there. Suppose you can get rid of your car because work and shopping come to you. Well, in those cases you might be able to live better on less income. In a world in which everything else is being redefined, our definitions of quality of life have to change as well. Simon Kuznets, who developed a system of national accounts, is considered to be the father of GDP. He received the Nobel Prize in Economics for his work, which took place during the 1930s. During that time, Presidents Hoover and Roosevelt were working to combat the Great Depression but had only fragments of indirect data, such as freight car loadings and stock prices, with which to evaluate the effectiveness of their new policies.36 The measurement schemes Kuznets devised helped them develop more finely honed approaches.


pages: 303 words: 93,545

I'm a stranger here myself: notes on returning to America after twenty years away by Bill Bryson

illegal immigration, millennium bug, Ronald Reagan, Simon Kuznets, telemarketer

But not until after 31,709.8 years would you count your trillionth dollar (and even then you would be less than one-fourth of the way through the pile of money representing America’s national debt). That is what $1 trillion is. What is interesting is that it is becoming increasingly evident that most of these inconceivably vast sums that get bandied about by economists and policy makers are almost certainly miles out anyway. Take gross domestic product, the bedrock of modern economic policy. GDP was a concept that was originated in the 1930s by the economist Simon Kuznets. It is very good at measuring physical things—tons of steel, board feet of lumber, potatoes, tires, and so on. That was all very well in a traditional industrial economy. But now the greater part of output for nearly all developed nations is in services and ideas—things like computer software, telecommunications, financial services—which produce wealth but don’t necessarily, or even generally, result in a product that you can load on a pallet and ship out to the marketplace.


pages: 339 words: 88,732

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, British Empire, business cycle, business intelligence, business process, call centre, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, digital map, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, payday loans, post-work, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

Kennedy WHEN PRESIDENT HOOVER WAS trying to understand what was happening during the Great Depression and design a program to fight it, a comprehensive system of national accounts did not exist. He had to rely on scattered data like freight car loadings, commodity prices, and stock price indexes that gave only an incomplete and often unreliable view of economic activity. The first set of national accounts was presented to Congress in 1937 based on the pioneering work of Nobel Prize winner Simon Kuznets, who worked with researchers at the National Bureau of Economic Research and a team at the U.S. Department of Commerce. The resulting set of metrics have served as beacons that helped illuminate many of the dramatic changes that transformed the economy throughout the twentieth century. But as the economy has changed so, too, must our metrics. More and more what we care about in the second machine age are ideas, not things—mind, not matter; bits, not atoms; and interactions, not transactions.


pages: 340 words: 91,387

Stealth of Nations by Robert Neuwirth

accounting loophole / creative accounting, big-box store, British Empire, call centre, collective bargaining, corporate governance, full employment, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Jane Jacobs, jitney, Johannes Kepler, joint-stock company, Joseph Schumpeter, megacity, microcredit, New Urbanism, Pepto Bismol, pirate software, profit motive, Shenzhen was a fishing village, Simon Kuznets, special economic zone, The Wealth of Nations by Adam Smith, thinkpad, upwardly mobile, Vilfredo Pareto, yellow journalism

Unlike Proudhon and Gesell, Keynes offered no utopian solution (though he did credit Mandeville and Gesell as being among the “brave army of heretics” who called into question traditional economic nostrums) and he didn’t suggest that all inequities should be abolished, just that the size of the differential should be limited. “There is social and psychological justification for significant inequalities of incomes and wealth,” he wrote, “but not for such large disparities as exist today.” Simon Kuznets, the great modern explicator of inequality, won the Nobel Prize in economics in 1971 for his work suggesting that inequality starts out as relatively minor in agricultural society, grows massively with industrialization, but tends to lessen in the later stages of industrial development. (As a modern example of how this might work, Bill Gates and Warren Buffett are both fabulously wealthy, but the difference between their assets and the wealth of the average American of today is likely less than the gap that existed between John D.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Since 2008, China's headline growth of around 8 percent has been driven by investment funded by new bank lending, from state-controlled banks, averaging around 30–40 percent of GDP. Some 10–20 percent of these loans may prove incapable of being repaid, amounting to losses of 3–8 percent of GDP. If these losses are correctly accounted for by writing them off against income, Chinese growth is much lower. Economist Simon Kuznets, who formulated the concept of GDP, cautioned against an over-simplified quantitative measurement providing a misleading illusion of precision. Senator Robert Kennedy gave the most eloquent criticism of GDP, highlighting distinctions between quantity and quality of growth: Our gross national product…if we should judge America by that—counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.


pages: 976 words: 235,576

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

"Robert Solow", 8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, carried interest, collateralized debt obligation, collective bargaining, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, full employment, future of work, gender pay gap, George Akerlof, Gini coefficient, glass ceiling, helicopter parent, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, Paul Samuelson, payday loans, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Steve Jobs, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, Winter of Discontent, women in the workforce, working poor, young professional, zero-sum game

Goldin and Katz summarize the contrasting eras: “The movement from artisanal production to factories in the nineteenth century involved the substitution of capital and unskilled labor for skilled (artisanal) labor, while the adoption of continuous-process and unit drive methods in the twentieth century involved the substitution of capital and skilled (educated) labor for unskilled labor.” Goldin and Katz, The Race Between Education and Technology, 125. “a decrease in the fraction”: See Joseph J. Spengler, “Changes in Income Distribution and Social Stratification: A Note,” American Journal of Sociology 59, no. 3 (November 1953): 247. Simon Kuznets famously held a similar view. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (March 1955): 1. See also Jeffrey Winters and Benjamin Page, “Oligarchy in the United States?,” Perspectives on Politics 7, no. 4 (December 2009): 731. now opposes economic equality: A common view treats technology’s forward march as a brute fact to which social and economic life must adjust, but that society cannot aspire to control, and for which society cannot be held to account.


pages: 411 words: 95,852

Britain Etc by Mark Easton

agricultural Revolution, Albert Einstein, Boris Johnson, British Empire, credit crunch, financial independence, garden city movement, global village, Howard Rheingold, income inequality, intangible asset, James Watt: steam engine, knowledge economy, knowledge worker, low skilled workers, mass immigration, moral panic, Ronald Reagan, science of happiness, sexual politics, Silicon Valley, Simon Kuznets, Slavoj Žižek, social software

Happiness appeared to be a candyfloss concept, attractive but ultimately fluffy and insubstantial – hardly the handy ready reckoner that government needed to decide its priorities. So it was that another yardstick for progress came to be accepted: money. Economists, not social scientists, were invited to sit closest to the seat of power. Tangible wealth, rather than ethereal well-being, became the fundamental political goal. Even finding a single accepted measure of affluence proved tricky, and it wasn’t until the 1930s that Russian-born economist Simon Kuznets came up with the concept of Gross Domestic Product (GDP). For industrialised countries such as Britain, trying to recover from the deprivations of the Second World War in the 1940s and 50s, GDP was embraced as the best way to monitor material and social development. Despite Kuznets’ own warning that his measure should not be used as a surrogate for well-being, those three letters became the focus of UK government activity, recited mantra-like as an incantation for a better life.


pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

3D printing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, bilateral investment treaty, Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, credit crunch, crony capitalism, crowdsourcing, debt deflation, declining real wages, deindustrialization, disruptive innovation, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, gig economy, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, housing crisis, income inequality, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, James Watt: steam engine, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, mini-job, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, plutocrats, Plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Altman, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, too big to fail, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Y Combinator, zero-sum game, Zipcar

This is what platform corporations want, and what neo-liberals have always wanted, because they depict all collective bodies as distorting the market and preventing market clearing.30 The platforms are reducing the rental income gained by those inside occupational communities and transferring that to themselves, further reducing the returns to labour and work. One of the least analysed aspects of the neo-liberal agenda has been the re-regulation of occupations, including all the great professions. Milton Friedman, an architect of the Chicago school of economics, wrote his first book (with Simon Kuznets) in 1945 on the medical professions, criticising their rent seeking through restricting the supply of doctors, imposing high standards, controlling fees and so on. When the neo-liberals achieved domination of the economics profession and economic policymaking in the 1980s, they launched an onslaught on occupational self-regulation. This was not deregulation, but state re-regulation. There was a shift to state licensing, usually by boards linked to finance or competition ministries.


pages: 436 words: 98,538

The Upside of Inequality by Edward Conard

affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, assortative mating, bank run, Berlin Wall, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Climatic Research Unit, cloud computing, corporate governance, creative destruction, Credit Default Swap, crony capitalism, disruptive innovation, diversified portfolio, Donald Trump, en.wikipedia.org, Erik Brynjolfsson, Fall of the Berlin Wall, full employment, future of work, Gini coefficient, illegal immigration, immigration reform, income inequality, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invisible hand, Isaac Newton, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, Kodak vs Instagram, labor-force participation, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, meta analysis, meta-analysis, new economy, offshore financial centre, paradox of thrift, Paul Samuelson, pushing on a string, quantitative easing, randomized controlled trial, risk-adjusted returns, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, selection bias, Silicon Valley, Simon Kuznets, Snapchat, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, total factor productivity, twin studies, Tyler Cowen: Great Stagnation, University of East Anglia, upwardly mobile, War on Poverty, winner-take-all economy, women in the workforce, working poor, working-age population, zero-sum game

As marginal producers raise their productivity—what economists call their marginal product of labor—to survive, wages rise. Under these conditions, competition for workers seems to lead to a never-ending spiral of productivity improvements and wage increases. These circumstances led economists to believe that income inequality narrows as countries grow richer—what economists call a Kuznets curve, after Simon Kuznets, the economist who theorized it. In agrarian economies, where a small cabal of landowners initially controls the means of production, industrialization of those economies often broadens ownership of the means of production and raises wages, which narrows income inequality. Similarly, where a broad base of uneducated talent becomes educated, income inequality again may narrow. But this provides a cautionary tale.


pages: 378 words: 102,966

Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, Thomas H Naylor, David Horsey

big-box store, Community Supported Agriculture, Corrections Corporation of America, Donald Trump, Exxon Valdez, financial independence, Ford paid five dollars a day, full employment, God and Mammon, greed is good, income inequality, informal economy, invisible hand, Isaac Newton, Mark Shuttleworth, McMansion, medical malpractice, new economy, Peter Calthorpe, Ralph Nader, Ray Oldenburg, Ronald Reagan, Silicon Valley, Simon Kuznets, single-payer health, The Great Good Place, trade route, upwardly mobile, Yogi Berra, young professional

A central mission of Redefining Progress is to spotlight the “bads" that are hiding out in the gross domestic product, a yardstick that has for the last half century been a drug of choice for conventional economists. As long as the GDP goes higher, everything’s cool. Politicians point to a swelling GDP as proof that their economic policies are working, and investors reassure themselves that with the overall expansion of the economy, their stocks will also expand. Yet even the chief architect of the GDP (then GNP), Simon Kuznets, believed that “the welfare of a nation can scarcely be inferred from a measurement like GNP.”5 Here’s why: although the overall numbers continue to rise, many key variables have grown worse. As we have already mentioned, the gap between the rich and everyone else is expanding. In addition, the nation is borrowing more and more from abroad, a symptom of anemic savings and mountains of household debt.


The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities by Mancur Olson

"Robert Solow", barriers to entry, British Empire, business cycle, California gold rush, collective bargaining, correlation coefficient, David Ricardo: comparative advantage, full employment, income per capita, Kenneth Arrow, market clearing, Norman Macrae, Pareto efficiency, price discrimination, profit maximization, rent-seeking, Sam Peltzman, selection bias, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, urban decay, working poor

Vann Woodward, The Strange Career of Jim Crow, 3rd rev. ed. (New York: Oxford University Press, 1974). 38. If all goes well (it rarely does), I shall devote my presidential address to the Southern Economic Association to this question; it will be published in the Southern Economic Journal in early 1983. 39. 1 am thankful to Ed Kearl for help on this point. 40. 1 am grateful to Moses Abramovitz, Geoffrey Brennan, and Simon Kuznets for giving me a fuller appreciation of the salience of this distinction. 41. "Thoughts on Catch-Up," October 1978, manuscript distributed to the conference on "The Political Economy of Comparative Growth Rates." University of Maryland, December 1978. 42. See Moses Abramovitz, "Notes on International Differences in Productivity Rates" in Mueller, The Political Economy of Growth. 43. As I argued earlier, differences in per capita income induce migration that tends to eliminate the differentials.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

"Robert Solow", Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, manufacturing employment, Network effects, New Urbanism, open economy, Productivity paradox, purchasing power parity, rent-seeking, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

The better state of social security in the United States, compared to other rich countries, is that our population is growing faster (thanks to immigration, not to fertility, as it turns out). A more ethereal reason that there could be positive effects of higher population is the genius principle. The more babies there are, the greater is the likelihood that one of them will grow up to be Mozart, Einstein, or Bill Gates. This effect, first pointed out by Simon Kuznets and Julian Simon,raises the stock of ideas that can then be used by any size population to better itself. Since ideas can be shared with additionalpersons at zero cost-an unlimited number of people can listen to a Mozart aria-new ideas are used moreeffectively in large than in small populations. The onetime cost of implementing a new idea can be spread across more people, all of whom can use the idea at zero cost.


pages: 374 words: 111,284

The AI Economy: Work, Wealth and Welfare in the Robot Age by Roger Bootle

"Robert Solow", 3D printing, agricultural Revolution, AI winter, Albert Einstein, anti-work, autonomous vehicles, basic income, Ben Bernanke: helicopter money, Bernie Sanders, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, computer age, conceptual framework, corporate governance, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, deindustrialization, deskilling, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, facts on the ground, financial intermediation, full employment, future of work, income inequality, income per capita, industrial robot, Internet of things, invention of the wheel, Isaac Newton, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, license plate recognition, Marc Andreessen, Mark Zuckerberg, market bubble, mega-rich, natural language processing, Network effects, new economy, Nicholas Carr, Paul Samuelson, Peter Thiel, positional goods, quantitative easing, RAND corporation, Ray Kurzweil, Richard Florida, ride hailing / ride sharing, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, Skype, social intelligence, spinning jenny, Stanislav Petrov, Stephen Hawking, Steven Pinker, technological singularity, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, universal basic income, US Airways Flight 1549, Vernor Vinge, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, wealth creators, winner-take-all economy, Y2K, Yogi Berra

Clearly, all these things are interactive, and it is extremely difficult to tell how things will pan out. But it is likely that the balance of the factors listed above will enable the mass of people to enjoy increasing incomes even as robots and AI start to proliferate. And it is perfectly plausible that there will not be a significant increase in income inequality. If there is, it may well be a temporary phenomenon. The great economist Simon Kuznets argued that economic development would at first increase inequality but that subsequently this widening would be reversed. Moreover, this story fits in with the history of the Industrial Revolution. As I showed in Chapter 1, in the first few decades of the nineteenth century the real incomes of workers fell. The upshot is that it is far too early to conclude that as robots and AI take hold there is bound to be a major move in the direction of increased inequality.


pages: 332 words: 106,197

The Divide: A Brief Guide to Global Inequality and Its Solutions by Jason Hickel

Andrei Shleifer, Asian financial crisis, Atahualpa, Bartolomé de las Casas, Bernie Sanders, Bob Geldof, Bretton Woods, British Empire, Cape to Cairo, capital controls, carbon footprint, clean water, collective bargaining, colonial rule, David Attenborough, David Graeber, David Ricardo: comparative advantage, declining real wages, dematerialisation, Doha Development Round, Elon Musk, European colonialism, falling living standards, financial deregulation, Fractional reserve banking, Francisco Pizarro, full employment, Hans Rosling, happiness index / gross national happiness, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Watt: steam engine, laissez-faire capitalism, land reform, land value tax, liberal capitalism, Live Aid, Mahatma Gandhi, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, Nelson Mandela, offshore financial centre, oil shale / tar sands, out of africa, plutocrats, Plutocrats, purchasing power parity, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scramble for Africa, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, structural adjustment programs, The Chicago School, The Spirit Level, trade route, transatlantic slave trade, transfer pricing, trickle-down economics, Washington Consensus, WikiLeaks, women in the workforce, Works Progress Administration

And increasing GDP growth means ramping up production and consumption each year. Of all the economic ideas out there today, this is perhaps the most hegemonic. It is so commonly accepted that almost nobody thinks to question it. We tend to take the GDP measure for granted as though it has always existed. Most people don’t realise that it was invented only recently. It has a history. During the 1930s, the economists Simon Kuznets and John Maynard Keynes set out to design an economic aggregate that would help policymakers figure out how to escape the Great Depression. The goal was to calculate the total monetary value of all the goods and services produced in the economy so they could see more clearly what was going wrong and what needed to be done to fix it. Kuznets argued for a measure that would help society maximise well-being and track the progress of human welfare; he wanted GDP to exclude negative things like advertising, commuting and policing, so that if those things went up governments would not be able to say that people’s lives were getting better when in fact they were not.


pages: 443 words: 112,800

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World by Jeremy Rifkin

"Robert Solow", 3D printing, additive manufacturing, Albert Einstein, American ideology, barriers to entry, borderless world, carbon footprint, centre right, collaborative consumption, collaborative economy, Community Supported Agriculture, corporate governance, decarbonisation, distributed generation, en.wikipedia.org, energy security, energy transition, global supply chain, hydrogen economy, income inequality, industrial cluster, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, job automation, knowledge economy, manufacturing employment, marginal employment, Martin Wolf, Masdar, megacity, Mikhail Gorbachev, new economy, off grid, oil shale / tar sands, oil shock, open borders, peak oil, Ponzi scheme, post-oil, purchasing power parity, Ray Kurzweil, Ronald Reagan, scientific worldview, Silicon Valley, Simon Kuznets, Skype, smart grid, smart meter, Spread Networks laid a new fibre optics cable between New York and Chicago, supply-chain management, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transaction costs, trickle-down economics, urban planning, urban renewal, Yom Kippur War, Zipcar

The gross domestic product (GDP) was created in the 1930s to measure the value of the sum total of economic goods and services generated over a single year. The problem with the index is that it counts negative as well as positive economic activity. If a country invests large sums of money in armaments, builds prisons, expands police security, and has to clean up polluted environments and the like, it’s included in the GDP. Simon Kuznets, an American who invented the GDP measurement tool, pointed out early on that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”28 Later in life, Kuznets became even more emphatic about the drawbacks of relying on the GDP as a gauge of economic prosperity. He warned that “[d]istinctions must be kept in mind between quantity and quality of growth . . . .


pages: 376 words: 118,542

Free to Choose: A Personal Statement by Milton Friedman, Rose D. Friedman

affirmative action, agricultural Revolution, air freight, back-to-the-land, bank run, banking crisis, business cycle, Corn Laws, Fractional reserve banking, full employment, German hyperinflation, invisible hand, means of production, minimum wage unemployment, oil shale / tar sands, oil shock, price stability, Ralph Nader, RAND corporation, rent control, road to serfdom, Sam Peltzman, school vouchers, Simon Kuznets, The Wealth of Nations by Adam Smith, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration

.: American Enterprise Institute, November 1971), p. 10. 6. Ibid., pp. 1, 5. 7. See Yale Brozen and Milton Friedman, The Minimum Wage Rate (Washington, D.C.: The Free Society Association, April 1966); Finis Welch, Minimum Wages: Issues and Evidence (Washington, D.C.: American Enterprise Institute, 1978); and Economic Report of the President, January 1979, p. 218. 8. See Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 8–21. 9. Michael Pertschuk, "Needs and Incomes," Regulation, March/April 1979. 10. William Taylor, Executive Vice-President of the Valley Camp Coal Company, as quoted in Melvyn Dubofsky and Warren Van Tine, John L. Lewis: A Biography (New York: Quadrangle/New York Times Book Co., 1977), p. 377. 11.


pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low-wage service sector, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

Friedman considered this his most technical piece of research, for which he was to later win the Nobel Prize, along with his work on monetary economics and business cycles.5 After two years in Washington, Friedman moved back to New York to work at the National Bureau of Economic Research (NBER). One of his professors from Columbia, Wesley Mitchell, was director. He also taught part-time at Columbia and worked as a research assistant for Simon Kuznets, who was to go on and win the 1971 Nobel Prize in economics. He had encouraged Friedman to work with empirical data, which at the time was a field in its formative stage, and became an important part of Friedman’s approach to economics. In September 1939 war broke out in Europe, but with little immediate effect on either Friedman or America generally, which was not to enter the war for another two years.


pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

Friedman considered this his most technical piece of research, for which he was to later win the Nobel Prize, along with his work on monetary economics and business cycles.5 After two years in Washington, Friedman moved back to New York to work at the National Bureau of Economic Research (NBER). One of his professors from Columbia, Wesley Mitchell, was director. He also taught part-time at Columbia and worked as a research assistant for Simon Kuznets, who was to go on and win the 1971 Nobel Prize in economics. He had encouraged Friedman to work with empirical data, which at the time was a field in its formative stage, and became an important part of Friedman’s approach to economics. In September 1939 war broke out in Europe, but with little immediate effect on either Friedman or America generally, which was not to enter the war for another two years.


pages: 437 words: 115,594

The Great Surge: The Ascent of the Developing World by Steven Radelet

"Robert Solow", Admiral Zheng, agricultural Revolution, Asian financial crisis, bank run, Berlin Wall, Branko Milanovic, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, clean water, colonial rule, creative destruction, demographic dividend, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, Erik Brynjolfsson, European colonialism, F. W. de Klerk, failed state, Francis Fukuyama: the end of history, Gini coefficient, global pandemic, global supply chain, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, land reform, low skilled workers, M-Pesa, megacity, Mikhail Gorbachev, Nelson Mandela, off grid, oil shock, out of africa, purchasing power parity, race to the bottom, randomized controlled trial, Robert Gordon, Second Machine Age, secular stagnation, Simon Kuznets, South China Sea, special economic zone, standardized shipping container, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, women in the workforce, working poor

Economist Branko Milanovic explores these and other ideas about inequality in developing countries in his terrific book The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.21 Inequality Within Countries Most people have a strong presumption that inequality within countries worsens as economic growth proceeds, and—possibly—gets better at higher income levels. Much of the early research on development, especially the work of Simon Kuznets and Sir Arthur Lewis in the 1950s, suggested that would be the case. Stylistically, everyone starts out poor but equal; then some people begin to earn higher incomes, creating a widening income gap; and then over time others catch up and partially close the gap. But extensive research shows that, over the past several decades, this pattern has not held. It is true that within some countries, inequality has gotten worse—such as in China—but inequality has improved in others—such as in Brazil.


pages: 387 words: 120,155

Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern

Affordable Care Act / Obamacare, availability heuristic, carbon footprint, Cass Sunstein, centre right, choice architecture, cognitive dissonance, collaborative consumption, correlation does not imply causation, Daniel Kahneman / Amos Tversky, different worldview, endowment effect, happiness index / gross national happiness, hedonic treadmill, hindsight bias, IKEA effect, illegal immigration, job satisfaction, Kickstarter, libertarian paternalism, light touch regulation, longitudinal study, market design, meta analysis, meta-analysis, Milgram experiment, nudge unit, peer-to-peer lending, pension reform, presumed consent, QR code, quantitative easing, randomized controlled trial, Richard Thaler, Right to Buy, Ronald Reagan, Rory Sutherland, Simon Kuznets, skunkworks, the built environment, theory of mind, traffic fines, twin studies, World Values Survey

The second problem was practical: how could a person, or government, empirically measure happiness? The first class of problems have kept philosophers happy, if no one else, for a good 200 years. But without an answer to the second question – measurement – the whole debate had to be left to philosophers in their armchairs. Measuring well-being: from GDP to SWB (subjective well-being) In 1937, Simon Kuznets presented the report National Income, 1929– 35 to the US Congress, which contained the initial idea of a single measure of economic progress. This measure became known as Gross Domestic Product (GDP), and was designed to capture the economic activity of an entire country. Since the Second World War, GDP has been used to measure and compare countries’ economic growth, but has also been used as a proxy for how well off the country’s citizens are.


pages: 414 words: 119,116

The Health Gap: The Challenge of an Unequal World by Michael Marmot

active measures, active transport: walking or cycling, Affordable Care Act / Obamacare, Atul Gawande, Bonfire of the Vanities, Broken windows theory, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, centre right, clean water, congestion charging, correlation does not imply causation, Doha Development Round, epigenetics, financial independence, future of work, Gini coefficient, Growth in a Time of Debt, illegal immigration, income inequality, Indoor air pollution, Kenneth Rogoff, Kibera, labour market flexibility, longitudinal study, lump of labour, Mahatma Gandhi, meta analysis, meta-analysis, microcredit, New Urbanism, obamacare, paradox of thrift, race to the bottom, Rana Plaza, RAND corporation, road to serfdom, Simon Kuznets, Socratic dialogue, structural adjustment programs, the built environment, The Spirit Level, trickle-down economics, twin studies, urban planning, Washington Consensus, Winter of Discontent, working poor

The first issue, growing inequalities, is of particular concern for health inequalities; the second, a preponderance of inherited wealth, is of concern for society as a whole, not only for health. I want to start with Piketty’s concern over the way wealth is being accumulated. The bulk of the chapter will then deal with health inequalities. Piketty’s central point is that the return on capital is higher than the growth of income. Therefore capital accumulates. Prior to Piketty’s painstaking collection and analysis of data, economists were not so concerned with distribution. Simon Kuznets, a distinguished US economist, observed that in the US and some other countries, as their economies developed and grew, up t0 the mid-twentieth century, inequality diminished. Inequality was just a stage of development, no need to worry about it, no politics involved. Piketty, drawing on detailed study of the data over a longer period of time, points out that the period Kuznets was observing, roughly 1914–70, was an aberration.


pages: 573 words: 115,489

Prosperity Without Growth: Foundations for the Economy of Tomorrow by Tim Jackson

"Robert Solow", bank run, banking crisis, banks create money, Basel III, basic income, bonus culture, Boris Johnson, business cycle, carbon footprint, Carmen Reinhart, Cass Sunstein, choice architecture, collapse of Lehman Brothers, creative destruction, credit crunch, Credit Default Swap, David Graeber, decarbonisation, dematerialisation, en.wikipedia.org, energy security, financial deregulation, Financial Instability Hypothesis, financial intermediation, full employment, Growth in a Time of Debt, Hans Rosling, Hyman Minsky, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, liberal capitalism, Mahatma Gandhi, mass immigration, means of production, meta analysis, meta-analysis, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, open economy, paradox of thrift, peak oil, peer-to-peer lending, Philip Mirowski, profit motive, purchasing power parity, quantitative easing, Richard Thaler, road to serfdom, Robert Gordon, Ronald Reagan, science of happiness, secular stagnation, short selling, Simon Kuznets, Skype, smart grid, sovereign wealth fund, Steve Jobs, The Chicago School, The Great Moderation, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, universal basic income, Works Progress Administration, World Values Survey, zero-sum game

See http://minerals.usgs.gov/minerals/pubs/commodity/bauxite/mcs-2015-bauxi.pdf (accessed 7 January 2016. On the footprint of metals, see Wiedmann et al. (2015). 21 See, for example, ‘Digging for victory’, The Economist, 15 November 2008, p. 69. 22 Krugman (2014), NCE (2014), Stern (2007) and UNEP (2011) are amongst the many proponents of this kind of argument. 23 This relationship is sometimes called the Environmental Kuznets Curve after the economist Simon Kuznets, who proposed that a similar inverted U-shaped relationship exists between incomes and income inequality. Evidence of the income Kuznets curve is also difficult to find (OECD 2008). For more discussion of the Environmental Kuznets Curve hypothesis, see, for example, Grossman and Krueger (1995), Jackson (1996), Rothman (1998). 24 Booth (2004: 73 et seq.). See also Dong et al. (2016). 25 The scenarios in this section have been extensively revised for this edition of the book, in part to account better for regional differences between poorer and richer countries and in part to take on board the demands of the 1.5°C target, agreed in Paris in December 2015. 26 Ehrlich and Holdren (1971).


pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, starchitect, stem cell, Steve Jobs, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

Until the past few decades, the received wisdom among economists was that income inequality would be fairly low in the preindustrial era—overall wealth and productivity were fairly small, so there wasn’t that much for an elite to capture—then spike during industrialization, as the industrialists and industrial workers outstripped farmers (think of China today). Finally, in fully industrialized or postindustrial societies, income inequality would again decrease as education became more widespread and the state played a bigger, more redistributive role. This view of the relationship between economic development and income inequality was first and most clearly articulated by Simon Kuznets, a Belarusian-born immigrant to the United States. Kuznets illustrated his theory with one of the most famous graphs in economics—the Kuznets curve, an upside-down U that traces the movement of society as its economy becomes more sophisticated and productive, from low inequality, to high inequality, and back down to low inequality. Writing in the early years of the industrial revolution, and without the benefit of Kuznets’s data and statistical analysis, Alexis de Tocqueville came up with a similar prediction: “If one looks closely at what has happened to the world since the beginning of society, it is easy to see that equality is prevalent only at the historical poles of civilization.


pages: 420 words: 124,202

The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen

"Robert Solow", Albert Einstein, All science is either physics or stamp collecting, barriers to entry, collective bargaining, computer age, Copley Medal, creative destruction, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, Flynn Effect, fudge factor, full employment, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, moral hazard, Network effects, Panopticon Jeremy Bentham, Paul Samuelson, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Ronald Coase, Simon Kuznets, spinning jenny, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transcontinental railway, zero-sum game, éminence grise

.: Inventors Publishing, 1931). 7 “lack of capital” Ibid. 8 more than half will continue to invest their time Thomas Astebro, “Inventor Perseverance After Being Told to Quit: The Role of Cognitive Biases,” Journal of Behavioral Decision Making 20, January 2007. 9 “may be inventors” Scherer, “Invention and Innovation in the Watt-Boulton Steam Engine Venture,” citing Joseph Schumpeter’s Theory of Economic Development. 10 Another study, this one conducted in 1962 Donald W. MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Simon Kuznets, ed., The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton: Princeton University Press, 1962). 11 the eighteenth-century Swiss mathematician Daniel Bernoulli Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York: John Wiley & Sons, 1996). 12 “The more inventive an independent inventor is” MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Kuznets, ed., Rate and Direction of Inventive Activity. 13 “first scientific man to study the Newcomen engine” “Henry Beighton” in Oxford Dictionary of National Biography. 14 Leonhard Euler applied Usher, History of Mechanical Inventions. 15 His published table of results Jennifer Karns Alexander, The Mantra of Efficiency: From Waterwheel to Social Control (Baltimore: Johns Hopkins University Press, 2008). 16 The resulting experiment Pacey, Maze of Ingenuity. 17 His example showed a generation of other engineers Mokyr, “The Great Synergy,” quoting Cardwell, 1994. 18 “In comparing different experiments” Pacey, Maze of Ingenuity. 19 As far back as the 1960s Dean Keith Simonton, “Creativity as Blind Variation and Selective Retention: Is the Creative Process Darwinian?”


pages: 480 words: 119,407

Invisible Women by Caroline Criado Perez

Affordable Care Act / Obamacare, augmented reality, Bernie Sanders, collective bargaining, crowdsourcing, Diane Coyle, Donald Trump, falling living standards, first-past-the-post, gender pay gap, gig economy, glass ceiling, Grace Hopper, Hacker Ethic, Indoor air pollution, informal economy, lifelogging, low skilled workers, mental accounting, meta analysis, meta-analysis, Nate Silver, new economy, obamacare, Oculus Rift, offshore financial centre, pattern recognition, phenotype, post-industrial society, randomized controlled trial, remote working, Silicon Valley, Simon Kuznets, speech recognition, stem cell, Stephen Hawking, Steven Levy, the built environment, urban planning, women in the workforce, zero-sum game

There are plenty of goods and services that GDP simply doesn’t account for. And the decision over which to include is somewhat arbitrary. Until the 1930s we didn’t really measure the economy with any seriousness. But that changed in the wake of the Great Depression. In order to address the economic meltdown, governments needed to know more precisely what was going on, and in 1934 a statistician called Simon Kuznets produced the United States’ first national accounts.1 This was the birth of GDP. Then the Second World War came along, and it was during this period, explains Coyle, that the frame we use now was established. It was designed to suit the needs of the war economy, she tells me. ‘The main aim was to understand how much output could be produced and what consumption needed to be sacrificed to make sure there was enough available to support the war effort.’


pages: 424 words: 119,679

It's Better Than It Looks: Reasons for Optimism in an Age of Fear by Gregg Easterbrook

affirmative action, Affordable Care Act / Obamacare, air freight, autonomous vehicles, basic income, Bernie Madoff, Bernie Sanders, Branko Milanovic, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, coronavirus, David Brooks, David Ricardo: comparative advantage, deindustrialization, Dissolution of the Soviet Union, Donald Trump, Elon Musk, Exxon Valdez, factory automation, failed state, full employment, Gini coefficient, Google Earth, Home mortgage interest deduction, hydraulic fracturing, Hyperloop, illegal immigration, impulse control, income inequality, Indoor air pollution, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, labor-force participation, liberal capitalism, longitudinal study, Lyft, mandatory minimum, manufacturing employment, Mikhail Gorbachev, minimum wage unemployment, obamacare, oil shale / tar sands, Paul Samuelson, peak oil, plutocrats, Plutocrats, Ponzi scheme, post scarcity, purchasing power parity, quantitative easing, reserve currency, rising living standards, Robert Gordon, Ronald Reagan, self-driving car, short selling, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, Steve Wozniak, Steven Pinker, supervolcano, The Chicago School, The Rise and Fall of American Growth, the scientific method, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transaction costs, uber lyft, universal basic income, War on Poverty, Washington Consensus, WikiLeaks, working poor, Works Progress Administration

But US federal spending for the poor, the working poor, the lower middle class, the disabled, and the retired is more substantial than generally understood. That federal entitlement spending is backed by two sources—taxes on the affluent and borrowing from the young through the national debt. Both are income-transfer mechanisms. Yet income inequality still is high. The Belarus-born economist Simon Kuznets, who won the Nobel Prize in Economics in 1971, showed that industrial development first increases and then decreases inequality. This formula has held since 1971 in most nations: if Kuznets continues to be correct, inequality in China soon will moderate. But inequality currents of the past century in the United States and Europe have been more like rolling waves than Kuznets expected, even discounting for the world wars.


pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, John Meriwether, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War

And then there are the employees of sandwich bars and the London Transport staff who enable city folk to get to work. A reasonable guess might be that between 100,000 and 150,000 people in Britain are finance professionals dealing in wholesale markets (what might generally be described as ‘the City’) and that two to three times that number support them. The principles of national income accounting were set out around the time of the Second World War by a group of economists – notably Simon Kuznets, James Meade and Richard Stone – and these principles are the standard means of measuring the economic contribution of a commercial activity. We assess the car industry by its added value: the difference between the selling price of the car and the cost of the steel, rubber and other materials that went into it. That added value is the sum of the earnings of the people who build the car and the operating profit (before financing costs) of the business.


pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama

Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, commoditize, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, end world poverty, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, liberation theology, libertarian paternalism, longitudinal study, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nelson Mandela, Nicholas Carr, North Sea oil, Panopticon Jeremy Bentham, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, Powell Memorandum, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Stanford marshmallow experiment, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

If anything, it can be counterproductive by drawing our attention to short-term fixes rather than to long-term foundations. 55.The Internet has amplified both our penchant for catchy fake quotations and our ability to verify actual sources. Variations of this quotation are often attributed to Albert Einstein, but thanks to O’Toole (2010), I was able to trace its true source to sociologist William Bruce Cameron (1963), p. 13. 56.The United States grew to be a major economic power well before we were able to measure GDP. In the 1930s, the economist Simon Kuznets architected the first system of national income accounts. Since then, GDP has taken on a life of its own in exactly the ways that Kuznets cautioned against. A good account of his warnings and our failure to take them into account is offered by Rowe (2008). 57.Rankism – the root of all forms of discrimination and abuse of power – is nicely defined and demolished by Robert W. Fuller (2004). 58.Quoted in Fisher (1988).


pages: 412 words: 128,042

Extreme Economies: Survival, Failure, Future – Lessons From the World’s Limits by Richard Davies

agricultural Revolution, air freight, Anton Chekhov, artificial general intelligence, autonomous vehicles, barriers to entry, big-box store, cashless society, clean water, complexity theory, deindustrialization, eurozone crisis, failed state, financial innovation, illegal immigration, income inequality, informal economy, James Hargreaves, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, large denomination, Livingstone, I presume, Malacca Straits, mandatory minimum, manufacturing employment, means of production, megacity, meta analysis, meta-analysis, new economy, off grid, oil shale / tar sands, pension reform, profit motive, randomized controlled trial, school choice, school vouchers, Scramble for Africa, side project, Silicon Valley, Simon Kuznets, Skype, spinning jenny, The Chicago School, the payments system, trade route, Travis Kalanick, uranium enrichment, urban planning, wealth creators, white picket fence, working-age population, Y Combinator, young professional

Researchers examining the impact of disasters use data from the publicly available Emergency Events Database (EM-DAT) compiled by the Centre for Research on the Epidemiology of Disasters (CRED) at www.emdat.be. Petty, Stone and GDP William Petty’s works are set out in his 1662 book on taxation and in his 1676 Political Arithmetick; his contribution to the development of systems of national accounts is traced in Kendrick (1970) and more recently in Davies (ed.) (2015). While other economists – notably Simon Kuznets in the US – helped develop modern GDP measures, Richard Stone was arguably the most important, winning the Nobel Prize for his work in 1984. His contribution is discussed in Johansen (1985) and much more detail on all the various contributors is set out in Studenski (1958), while an accessible modern history is Coyle (2014). Economic impact of the tsunami Estimates of damage in Aceh are set out in World Bank (2006), which also contains data on the localized inflation impact of aid-agency spending.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

“Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118 (Feb. 2003), 1–39. 3. Gilbert Burck, “American Genius for Productivity,” Fortune (July 1955), 87. 4. Jack Metzgar, Striking Steel: Solidarity Remembered (Philadelphia: Temple University Press, 2000), 37. 5. Kenneth T. Jackson, Crabgrass Frontier, The Suburbanization of the United States (New York: Oxford University Press, 1985), 283–84. 6. Simon Kuznets, Share of Upper Income Groups in Income and Savings (New York: National Bureau of Economic Research, 1953); Joint Economic Committee, Productivity, Prices, and Incomes, 89th Cong., 2d sess. (Washington, D.C.: Government Printing Office, 1967). 7. Alfred E. Eckes Jr. and Thomas W. Zeiler, Globalization and the American Century (Cambridge: Cambridge University Press, 2003), 57–58. 8. Microeconomics, which until Keynes was synonymous with economics as a whole, investigated the role of prices in the allocation of resources.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

Their value as innovators—or the value they had created for so many urban dwellers—was not part of the equation. The less people spend on killing roaches, the worse it is for the economy by corporate and government measures. The universal metric of our economy’s health is the GDP, a tool devised by the National Bureau of Economic Research to help the Hoover administration navigate out of the Great Depression. Even the economist charged with developing the metric, Simon Kuznets, saw the limitations of the policy tool he had created, and spoke to Congress quite candidly of the many dimensions of the economy left out of his crude measure. Burning less gas, eating at home, enjoying neighbors, playing cards, and walking to work all subtract from the GDP, at least in the short term. Cancer, divorce, attention-deficit/hyperactivity disorder diagnoses, and obesity all contribute to GDP.


pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott

"Robert Solow", airport security, banking crisis, Bretton Woods, British Empire, business cycle, collective bargaining, complexity theory, creative destruction, cuban missile crisis, Francis Fukuyama: the end of history, full employment, Gordon Gekko, greed is good, Gunnar Myrdal, if you build it, they will come, Isaac Newton, Joseph Schumpeter, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, means of production, Mont Pelerin Society, mortgage debt, New Journalism, Northern Rock, Paul Samuelson, Philip Mirowski, price mechanism, pushing on a string, road to serfdom, Robert Bork, Ronald Reagan, Simon Kuznets, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, trickle-down economics, War on Poverty, Yom Kippur War

According to Galbraith’s biographer Richard Parker, “Currie realized how woefully understaffed the Keynesian camp was in the administration compared to the trust-busting and national-planning camps. Serious recruitment and careful placement of sympathetic allies in key Washington offices became an imperative.”42 Inspired by a common creed, the young Keynesians sought each other out in the corridors of power and began meeting at the National Planning Association, set up in 1934. Keynesian ideas also took root in America thanks to the work of econometricians and statisticians like Simon Kuznets, professor of economics and statistics at the University of Pennsylvania, and his followers at the National Bureau of Economic Research and the U.S. Department of Commerce, whose work logging the workings of the economy warranted Kuznets an honorable mention in The General Theory. Although Kuznets never became a Keynesian, his pioneering work on compiling statistics about national income and gross national product were called in evidence to fuel Keynes’s argument that bolstering aggregate demand would boost economic growth.


pages: 436 words: 76

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay

"Robert Solow", Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, business cycle, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, Gunnar Myrdal, haute couture, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, knowledge economy, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, yield curve, yield management

Fogel USA 1993 Quantitative economic history Milton Friedman USA 1976 Macroeconomics Ragnar Frisch Norway 1969 Economic dynamics CWJ Granger UK 2003 Time series analysis Trygve Haavelmo Norway 1989 Econometrics John C. Harsanyi USA 1994 Game theory Friedrich von Hayek Austria/ UK 1974 Economic systems James J. Heckman USA 2000 Econometrics John R. Hicks UK 1972 General equilibrium theory Daniel Kahneman USA 2002 Behavioral economics Leonid Vitaliyevich Kantorovich USSR 1975 Optimization modeling Lawrence R. Klein USA 1980 Econometrics Tjalling C. Koopmans USA Simon Kuznets USA 1975 Optimization modeling 1971 Empirical studies of economic growth Wassily Leontief USA 1973 Input-output analysis Appendix { 359} Name Country Year Subject Arthur Lewis UK 1979 Development economics Robert E. Lucas Jr. USA 1995 Real business cycle theory Harry M. Markowitz USA 1990 Finance theory Daniel L. McFadden USA 2000 Econometrics James E. Meade UK 1977 Trade theory Robert C.


pages: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population

If the temporary tax cuts were made permanent, then the addition to the deficit would be $3.2 trillion. 8.“Transcript of the Press Conference on the Release of the October 2017 World Economic Outlook” (Washington, DC: International Monetary Fund, Oct. 13, 2017); and Christine Lagarde, “2018 Article IV Consultation for the United States Opening Remarks” (Washington, DC: International Monetary Fund, June 14, 2018). 9.This was a central insight of Nobel Prize winner Simon Kuznets, and the fact that it always seemed so, as he wrote in the middle of the twentieth century, led it to be called Kuznets’s Law. 10.This book builds on my earlier work on globalization, financialization, inequality, and innovation, weaving these threads together, showing their interrelation in a tapestry that, I hope, is a convincing depiction of the sources of progress and the pitfalls that we’ve encountered along the way.


pages: 442 words: 130,526

The Billionaire Raj: A Journey Through India's New Gilded Age by James Crabtree

accounting loophole / creative accounting, Asian financial crisis, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, Commodity Super-Cycle, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, liberal capitalism, Mahatma Gandhi, McMansion, megacity, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, rent-seeking, Rubik’s Cube, Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, Washington Consensus, WikiLeaks, yellow journalism, young professional

Most inequality studies had little to say about the super-rich, who are tiny in number and thus hard to capture in research surveys. But Piketty’s data also showed the share held by the very richest—the “0.001%,” as he called them—shooting up even more quickly. Echoing Bhagwati, not everyone viewed this widening gap as a problem. One theory—known as the Kuznets curve, after economist Simon Kuznets—suggests that rising inequality is transitory, as most countries become more unequal in their early stages of development and then less so as they grow rich. As a result, mainstream economists have often argued that inequality acts as a spur to effort and that in any case it will decline in time. But more recent research, much of it again from the IMF, has begun to overturn this consensus, showing that unequal nations tend to grow more slowly, and are also more prone to financial instability.49 Countries with sharp economic divisions—for instance between business owners and their workers—also find it harder to create the kind of broad social agreements that can buttress support for structural economic reforms, a point made by Harvard economist Dani Rodrik and others.


Year 501 by Noam Chomsky

"Robert Solow", anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, business cycle, capital controls, colonial rule, corporate governance, cuban missile crisis, declining real wages, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, European colonialism, experimental subject, Fall of the Berlin Wall, Howard Zinn, invisible hand, land reform, land tenure, long peace, mass incarceration, means of production, Monroe Doctrine, non-tariff barriers, offshore financial centre, plutocrats, Plutocrats, price stability, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, Simon Kuznets, strikebreaker, structural adjustment programs, the scientific method, The Wealth of Nations by Adam Smith, trade liberalization, trickle-down economics, union organizing, War on Poverty, working poor

In his 1952 study of late development, Alexander Gerschenkron describes the “approximate sixfold increase in the volume of industrial output” as “the greatest and the longest [spurt of industrialization] in the history of the country’s industrial development,” though this “great industrial transformation engineered by the Soviet government” had “a remote, if any” relation to “Marxian ideology, or any socialist ideology for that matter”; and was, of course, carried out at extraordinary human cost. In his studies 10 years later of long-term trends in economic development, Simon Kuznets listed Russia among the countries with the highest rate of growth of per capita product, along with Japan and Sweden, with the US—having started from a far higher peak—in the middle range over a century, slightly above England.3 The ultranationalist threat was greatly enhanced after Russia’s leading role in defeating Hider left it in control of Eastern and parts of Central Europe, separating these regions too from the domains of Western control.


The Hour of Fate by Susan Berfield

bank run, buy and hold, capital controls, collective bargaining, friendly fire, Howard Zinn, income inequality, new economy, plutocrats, Plutocrats, Ralph Waldo Emerson, Simon Kuznets, strikebreaker, the market place, transcontinental railway, wage slave, working poor

“Represents an effort”: Roosevelt to Root, December 5, 1900, Theodore Roosevelt Papers, Library of Congress. 11. Located on Fifth Avenue: Details from “In New Quarters,” New York Sun, March 5, 1881; 1901 Union League Club Annual Report; Henry Bellows, Union League Club History; “Lost Union League Clubhouse,” daytoninmanhattan.com. 12. Morgan’s first father-in-law: Jonathan Sturges, father of Morgan’s first wife, Amelia Sturges. 13. Gross national product: Simon Kuznets, Capital in the American Economy: Its Formation and Financing (Princeton, NJ: Princeton University Press, 1961), 557–58. 14. “Vexatious” legislation: “The Financial Situation,” New York Sun, December 31, 1900, 7. 15. More than twelve hundred: Lewis L. Gould, Reform and Regulation: American Politics from Roosevelt to Wilson, 16. 16. It was responsible: Strouse, Morgan: American Financier, 404; employment number, Craig Phelan, Divided Loyalties: The Public and Private Life of Labor Leader John Mitchell, 135; Philip S.


pages: 470 words: 130,269

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas by Janek Wasserman

Albert Einstein, American Legislative Exchange Council, anti-communist, battle of ideas, Berlin Wall, Bretton Woods, business cycle, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, different worldview, Donald Trump, experimental economics, Fall of the Berlin Wall, floating exchange rates, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, housing crisis, Internet Archive, invisible hand, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liberal capitalism, market fundamentalism, mass immigration, means of production, Menlo Park, Mont Pelerin Society, New Journalism, New Urbanism, old-boy network, Paul Samuelson, Philip Mirowski, price mechanism, price stability, RAND corporation, random walk, rent control, road to serfdom, Robert Bork, rolodex, Ronald Coase, Ronald Reagan, Silicon Valley, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, union organizing, urban planning, Vilfredo Pareto, Washington Consensus, zero-sum game, éminence grise

The atmosphere of industrial revolutions—of ‘progress’—is the only one in which capitalism can survive.”23 Despite the book’s sweeping scope, vast erudition, and hortatory rhetoric, Business Cycles misfired. The academic community lavished praise on its ambition—Oskar Lange grouping it in “intention and horizon” with Marx’s Kapital—yet few read the work and fewer still deemed it an important contribution. Schumpeter, Simon Kuznets argued, had not produced the “exact economics” to which he aspired, nor had he reconciled economic, statistical, and historical approaches successfully. At a 1939 workshop at Harvard, it became clear that nobody had studied the book, which exasperated the vain Schumpeter. He viewed Business Cycles as his magnum opus, which would confirm his status as the era’s greatest economist. It had taken him seven years to complete, during which Germany succumbed to National Socialism, Keynes wrote his General Theory, and the world descended into war.


pages: 621 words: 157,263

How to Change the World: Reflections on Marx and Marxism by Eric Hobsbawm

anti-communist, banking crisis, battle of ideas, Berlin Wall, British Empire, continuation of politics by other means, creative destruction, currency manipulation / currency intervention, deindustrialization, discovery of the americas, experimental subject, Fall of the Berlin Wall, full employment, Gunnar Myrdal, labour market flexibility, liberal capitalism, market fundamentalism, mass immigration, means of production, new economy, Simon Kuznets, Thorstein Veblen, Upton Sinclair, upwardly mobile, Vilfredo Pareto, zero-sum game

Even the natural sciences came under attack, not only because of the potential or actual damage caused by technology, but because their validity as modes of understanding the world was questioned. This was perhaps least marked in economics, where Marxists had always been peripheral, though among the first ten Nobel laureates in this field there were three who were formed or partly formed in the early years of the Soviet Union or who were still active there (Wassily Leontief, Simon Kuznets, Leonid Kantorovitch). However, from 1974, when Friedrich von Hayek received the prize, still balanced by his ideological opposite, the Swede Gunnar Myrdal, and 1976, when it was given to Milton Friedman, it became markedly identified with a sharp turn away from Keynesian and other interventionist theories and a return to an increasingly uncompromising laissez-faire. Cracks in this prevailing consensus did not begin to appear until the late l990s.


pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

"Robert Solow", Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low skilled workers, M-Pesa, market bubble, means of production, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

Quigley, NY: Russell Sage Foundation, 2006, pp. 221–58; Facundo Alvaredo and Emmanuel Saez, ‘Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective’, Journal of the European Economic Association 7:5, 2009, pp. 1140–67; Anthony Atkinson, Thomas Piketty, and Emmanuel Saez, ‘Top Incomes in the Long Run of History’, Journal of Economic Literature 49:1, 2011, pp. 3–71. 23 Simon Kuznets, ‘Economic Growth and Income Inequality’, American Economic Review 45:1, 1955. 24 Branko Milanovic has produced innovative work that assesses global inequality by measuring within-country as well as across-country inequality. The top 10 percent of the income distribution in a poor developing country, after all, might have a lower average income than the bottom 10 percent of a rich developed country.


pages: 653 words: 155,847

Energy: A Human History by Richard Rhodes

Albert Einstein, animal electricity, California gold rush, Cesare Marchetti: Marchetti’s constant, Copley Medal, dark matter, David Ricardo: comparative advantage, decarbonisation, demographic transition, Dmitri Mendeleev, Drosophila, Edmond Halley, energy transition, Ernest Rutherford, Fellow of the Royal Society, flex fuel, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Menlo Park, Mikhail Gorbachev, new economy, nuclear winter, oil rush, oil shale / tar sands, oil shock, peak oil, Ralph Nader, Richard Feynman, Ronald Reagan, selection bias, Simon Kuznets, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, uranium enrichment, urban renewal, Vanguard fund, working poor, young professional

When they examined the relationship between the level of air pollution and increasing income in a cross section of urban areas in forty-two countries, they found that for two pollutants—sulfur dioxide and “smoke”—concentrations increased with per capita gross domestic product (GDP) at low national income levels but decreased with GDP growth at higher levels of income.35 The graph of the SO2 finding in their influential 1991 paper looks like this: Smog obscuring the George Washington Bridge, New York City, 1973. The curve on the Princeton economists’ graph happened to resemble a Kuznets curve, a visualization of a controversial economic theory named after the twentieth-century Belarussian American economist Simon Kuznets. Kuznets had related increasing income and income inequality, a different relationship entirely. The Princeton economists’ version thus came to be called an environmental Kuznets curve (EKC). In its standard form, it looks like this: Environmental Kuznets curve. An environmental Kuznets curve models a relationship such as the one the Princeton economists had found: increasing pollution in the earlier stages of industrialization and then, at a threshold point of rising personal income, increasing efforts to reduce pollution.


pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

"Robert Solow", Airbus A320, Albert Einstein, Albert Michelson, algorithmic trading, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Benoit Mandelbrot, bitcoin, Black Swan, Bonfire of the Vanities, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, easy for humans, difficult for computers, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Hans Rosling, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, Moneyball by Michael Lewis explains big data, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, oil shock, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Pierre-Simon Laplace, popular electronics, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, World Values Survey, Yom Kippur War, zero-sum game

The R&A is the rule-making spin-off from the Royal and Ancient Golf Club of St Andrews, which maintains the world-famous links of that town. 3 Carter (2019). 4 Kelvin was the great physicist whom we met in chapter 3 dismissing the possibility of manned flight. 5 Knight (1940) fn. 10. 6 McCoy, Prelec and Seung (2017). 7 Goldstein and Gigerenzer (2002) p. 76. 8 Lenin (1909) p. 397. 9 Kahneman (2011) pp. 156–8. 10 Ibid. p. 158. 11 Carroll and Gardner (2000) p. 155. 12 Carroll and Gardner (2000) pp. 157–64. 13 We take comfort from the knowledge that one of the doyens of classical statistics, Maurice Kendall, used the same analogy with Carroll sixty years ago and added, ‘if you think all this is ridiculous and beneath the notice of grave and serious-minded adults, you may care to know that the students of the theory of probability are still discussing the question whether one can take an even chance on the truth of any proposition whose meaning is not known’ (quoted in Shackle 1968, p. 35). 14 Lucas (1988), published (2011) p. 4. 15 Cochrane (2009). 16 Romer (2015). 17 Carroll and Gardner (2000) pp. 225–6. 18 GDP is a construct, created by national statistical agencies, and derived from many thousands of data points drawn from a multiplicity of sources. The principles of the estimation of GDP were established in the late 1930s and early 1940s, by the American Simon Kuznets and the British economists Richard Stone and James Meade. These principles have subsequently been greatly elaborated by statisticians around the world, and today there is a United Nations System of Standardised National Accounts, a weighty document which is subject to regular revision and whose procedures are followed in statistical agencies in all major countries. However, there remains considerable scope for discretion in the application of the principles, and cross-country variation in the data which are available to the compilers, and in all major countries there are further lengthy volumes that describe the particular practices of their national agencies. 19 Although, as Nick Chater observes, the differences between heat and temperature or momentum and velocity are not intuitive – measurement is in the context of an underlying physical theory (Chater 2018 p. 25). 20 Haldane, Brennan and Madouros (2010) p. 88. 21 See Coyle (2014) pp. 93–104 for more. 22 See Adams and Levell (2014) for more. 23 An excellent account of the Tonkin incident can be found in Hastings (2018), chapter 9. 24 See World Bank (2019) for more details on this. 25 Leamer (1983) p. 37.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Its report is available as Jean-Paul Fitoussi, Amartya Sen, and Joseph E. Stiglitz, Mismeasuring Our Lives: Why GDP Doesn’t Add Up (New York: New Press, 2010), and available at http://www.stiglitz-sen-fitoussi.fr/en/index.htm. (Translations are available in Chinese, Korean, Italian, and other languages.) 75. This point was made right at the start, by the early developer of the national income accounts, Simon Kuznets, who noted that “the welfare of a nation can scarcely be inferred from a measure of national income.” Kuznets, “National Income, 1929–1932,” 73rd U.S. Cong., 2d sess., 1934, Senate doc. no. 124, p. 7. Chapter Seven JUSTICE FOR ALL? HOW INEQUALITY IS ERODING THE RULE OF LAW 1. There are many instances where laws can be seen as preserving inequities. The laws that protected and preserved slavery offer the most profound example.


pages: 547 words: 172,226

Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu, James Robinson

"Robert Solow", Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, banking crisis, Bartolomé de las Casas, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, collective bargaining, colonial rule, conceptual framework, Corn Laws, creative destruction, crony capitalism, Deng Xiaoping, desegregation, discovery of the americas, en.wikipedia.org, European colonialism, failed state, Fall of the Berlin Wall, falling living standards, financial independence, financial innovation, financial intermediation, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, income inequality, income per capita, indoor plumbing, invention of movable type, invisible hand, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kickstarter, land reform, mass immigration, Mikhail Gorbachev, minimum wage unemployment, Mohammed Bouazizi, Paul Samuelson, price stability, profit motive, Rosa Parks, Scramble for Africa, Simon Kuznets, spice trade, spinning jenny, Steve Ballmer, Steve Jobs, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, Washington Consensus, working poor

But it wasn’t, because the government then forcibly converted all the dollar bank accounts into pesos, but at the old one-for-one exchange rate. Someone who had had $1,000 saved suddenly found himself with only $250. The government had expropriated three-quarters of people’s savings. For economists, Argentina is a perplexing country. To illustrate how difficult it was to understand Argentina, the Nobel Prize–winning economist Simon Kuznets once famously remarked that there were four sorts of countries: developed, underdeveloped, Japan, and Argentina. Kuznets thought so because, around the time of the First World War, Argentina was one of the richest countries in the world. It then began a steady decline relative to the other rich countries in Western Europe and North America, which turned, in the 1970s and ’80s, into an absolute decline.


pages: 566 words: 163,322

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, lateral thinking, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population

Some world leaders still tend to dismiss vices like inequality, and the corruption that often feeds it, as timeless and inevitable sins that are common to all countries, particularly poor ones in the chaotic early stages of development. But this is a cop-out. Developing societies do tend to be more unequal than rich ones, but it is increasingly unclear that their inequality problem will naturally disappear. The belief that inequality fades over time had been the working assumption since the 1950s, when the economist Simon Kuznets pointed out that countries tend to grow more unequal in the early stages of development, as some poor farmers move to better-paying factory jobs in the cities, and less unequal in the later stages, as the urban middle class grows. Today, however, inequality appears to be rising at all stages of development: in poor, middle-class, and rich countries. One reason for the widening threat of inequality is that the period of intense globalization before 2008 tended to depress blue-collar wages.


Money and Government: The Past and Future of Economics by Robert Skidelsky

anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, market clearing, market friction, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, mobile money, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, placebo effect, price stability, profit maximization, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

Share of US income going to the top36 25 20 (per cent) Share of the different groups in total income 15 10 5 0 1910 Top 1% (annual incomes above $352,000 in 2010) Top 5%–1% (annual incomes between $150,000 and $352,000 in 2010) Top 10%–5% (annual incomes between $108,000 and $150,000 in 2010) 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 means that inequality will rise even more. Piketty predicts that growth will not exceed 1–1.5 per cent in the long-run, whereas the average return on capital will be 4–5 per cent. (This contrasts with the predictions of the American statistician Simon Kuznets, whose data – dating from 1955 – showed inequality naturally diminishing over time.) Using large data sets, Piketty presented a U-shaped curve running from the late nineteenth century to today, with a ‘compression’ of inequality between 1914 and 1970. It is a sign of the importance of Piketty’s intervention that it provoked a furious debate. This has centred on his use of data and his theoretical framework.


Termites of the State: Why Complexity Leads to Inequality by Vito Tanzi

"Robert Solow", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Andrei Shleifer, Andrew Keen, Asian financial crisis, asset allocation, barriers to entry, basic income, bitcoin, Black Swan, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, clean water, crony capitalism, David Graeber, David Ricardo: comparative advantage, deindustrialization, Donald Trump, Double Irish / Dutch Sandwich, experimental economics, financial repression, full employment, George Akerlof, Gini coefficient, Gunnar Myrdal, high net worth, hiring and firing, illegal immigration, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labor-force participation, libertarian paternalism, Long Term Capital Management, market fundamentalism, means of production, moral hazard, Naomi Klein, New Urbanism, obamacare, offshore financial centre, open economy, Pareto efficiency, Paul Samuelson, price stability, principal–agent problem, profit maximization, pushing on a string, quantitative easing, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, Tyler Cowen: Great Stagnation, universal basic income, unorthodox policies, urban planning, very high income, Vilfredo Pareto, War on Poverty, Washington Consensus, women in the workforce

I had also spent another two years working for a CongressionalPresidential Commission (the Outdoor Recreation Resources Review Commission) that was tasked with determining the optimal use for the extensive public land owned by the US federal government. This commission produced several reports that set the stage for the future use of public land. During the years I spent at Harvard, in the first half of the 1960s, some of the leading economists of the time – Paul Samuelson, Robert Solow, Simon Kuznets, Kenneth Arrow, Franco Modigliani, Wassily Leontief, Kenneth Galbraith, Robert Dorfman, Alvin Hansen, Otto Eckstein, James Duesenberry, and several others – were in the Boston area, either at Harvard or at MIT. Richard Musgrave, who was then considered the leading public finance economist in the United States, would come to Harvard a little later and would be the second reader of my doctoral dissertation; I thus completed my public finance preparation under a third refugee from Nazi Germany.


pages: 840 words: 202,245

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick

accounting loophole / creative accounting, Asian financial crisis, bank run, Bretton Woods, business cycle, capital controls, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, disintermediation, diversified portfolio, Donald Trump, financial deregulation, fixed income, floating exchange rates, Frederick Winslow Taylor, full employment, George Akerlof, Hyman Minsky, income inequality, index fund, inflation targeting, inventory management, invisible hand, John Meriwether, Kitchen Debate, laissez-faire capitalism, locking in a profit, Long Term Capital Management, market bubble, minimum wage unemployment, MITM: man-in-the-middle, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, new economy, North Sea oil, Northern Rock, oil shock, Paul Samuelson, Philip Mirowski, price stability, quantitative easing, Ralph Nader, rent control, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Ronald Reagan: Tear down this wall, shareholder value, short selling, Silicon Valley, Simon Kuznets, technology bubble, Telecommunications Act of 1996, The Chicago School, The Great Moderation, too big to fail, union organizing, V2 rocket, value at risk, Vanguard fund, War on Poverty, Washington Consensus, Y2K, Yom Kippur War

He helped develop the nation’s tax withholding system, which made possible the rapid growth of government that he ultimately deplored. There is no greater irony in American economic history. He later said his experience in government reinforced his doubts about its efficiency. Friedman received his Ph.D. from Columbia in 1945. His doctoral thesis already contained conservative claims. Written with the future Nobelist Simon Kuznets, it was titled “Income from Independent Professional Practice,” and argued that state limitations on the number of entrants, even if the desire is to maintain a high standard, into professions like medicine, dentistry, and law raised fees artificially and reduced the accessibility of the professional services. With his degree at last in hand, Friedman sought a teaching position at a good university.


pages: 789 words: 207,744

The Patterning Instinct: A Cultural History of Humanity's Search for Meaning by Jeremy Lent

"Robert Solow", Admiral Zheng, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, Atahualpa, Benoit Mandelbrot, Bretton Woods, British Empire, Buckminster Fuller, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, commoditize, complexity theory, conceptual framework, dematerialisation, demographic transition, different worldview, Doomsday Book, en.wikipedia.org, European colonialism, failed state, Firefox, Francisco Pizarro, Georg Cantor, happiness index / gross national happiness, hedonic treadmill, income inequality, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of gunpowder, invention of writing, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, Lao Tzu, Law of Accelerating Returns, mandelbrot fractal, mass immigration, megacity, Metcalfe's law, Mikhail Gorbachev, Nicholas Carr, Norbert Wiener, oil shale / tar sands, out of africa, peak oil, Pierre-Simon Laplace, QWERTY keyboard, Ray Kurzweil, Sapir-Whorf hypothesis, Scientific racism, scientific worldview, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, social intelligence, South China Sea, Stephen Hawking, Steven Pinker, technological singularity, the scientific method, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, Turing test, ultimatum game, urban sprawl, Vernor Vinge, wikimedia commons

“Big ideas,” McNeil observes, “all became orthodoxies, enmeshed in social and political systems, and difficult to dislodge even if they became costly.”68* The “Hedonic Treadmill” A powerful example of ideological lock-in is the standard of gross domestic product (GDP), by which the performance of governments and countries is judged across the world. The economist who invented it in the 1930s, Simon Kuznets, warned that it was a “potentially dangerous oversimplification that could be misleading” and subject to “resulting abuse.” However, in the aftermath of World War II, as the world was gearing up for the Great Acceleration, GDP was formally incorporated into official policy making.69 The basic fault with GDP as a measure of a country's performance is that it fails to distinguish between activities that promote welfare and those that reduce it.


pages: 637 words: 199,158

The Tragedy of Great Power Politics by John J. Mearsheimer

active measures, Berlin Wall, Bretton Woods, British Empire, colonial rule, continuation of politics by other means, deindustrialization, discrete time, Dissolution of the Soviet Union, Francis Fukuyama: the end of history, illegal immigration, long peace, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, oil shock, Pareto efficiency, RAND corporation, Ronald Reagan, Simon Kuznets, South China Sea, The Wealth of Nations by Adam Smith, Thomas L Friedman, Yom Kippur War

., Freedom and Control in Modern Societies (New York: Van Nostrand, 1954), pp. 206–42; Katherine Organski and A.F.K. Organski, Population and World Power (New York: Knopf, 1961); and Michael S. Teitelbaum and Jay M. Winter, The Fear of Population Decline (Orlando, FL: Academic Press, 1985). 20. The Chinese and Russian figures are from World Bank Atlas, 2000 (Washington, DC: World Bank, April 2000), pp. 24–25. The U.S. figure is from the Census Bureau. 21. Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, CT: Yale University Press, 1966), chap. 2. 22. On the importance of wealth for military might, see Robert Gilpin, War and Change in World Politics (Cambridge: Cambridge University Press, 1981); Paul M. Kennedy, The Rise and Fall of British Naval Mastery (London: Allen Lane, 1976); Paul M. Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Random House, 1987); A.F.K.


Wealth and Poverty of Nations by David S. Landes

"Robert Solow", Admiral Zheng, affirmative action, agricultural Revolution, Atahualpa, Ayatollah Khomeini, Bartolomé de las Casas, British Empire, business cycle, Cape to Cairo, clean water, colonial rule, Columbian Exchange, computer age, David Ricardo: comparative advantage, deindustrialization, deskilling, European colonialism, Fellow of the Royal Society, financial intermediation, Francisco Pizarro, germ theory of disease, glass ceiling, illegal immigration, income inequality, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, invisible hand, Isaac Newton, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Just-in-time delivery, Kenneth Arrow, land tenure, lateral thinking, mass immigration, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, Monroe Doctrine, Murano, Venice glass, new economy, New Urbanism, North Sea oil, out of africa, passive investing, Paul Erdős, Paul Samuelson, Philip Mirowski, rent-seeking, Right to Buy, Scramble for Africa, Simon Kuznets, South China Sea, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade, Vilfredo Pareto, zero-sum game

My teachers first, whose lessons and example have stayed with me: A. P. Usher, M. M. Postan, Donald C. McKay, Arthur H. Cole. Also my colleagues in departments of economics and history in Columbia University (Carter Goodrich, Fritz Stern, Albert Hart, and George Stigler especially); in the University of California at Berkeley (Kenneth Stampp, Hans Rosenberg, Richard Herr, Carlo Cipolla, Henry Rosovsky, and Albert Fishlow especially); and at Harvard (Simon Kuznets, C. Crane Brinton, Alexander Gerschenkron, Richard Pipes, David and Aida Donald, Benjamin Schwartz, Harvey Leibenstein, Robert Fogel, Zvi Griliches, Dale Jorgensen, Amartya Sen, Ray Vernon, Robert Barro, Jeff Sachs, Jess Williamson, Claudia Goldin, Daniel Bell, Nathan Glazer, Talcott Parsons, Brad DeLong, Patrice Higonnet, Martin Peretz, Judith Vichniac, Stephen Marglin, Winnie Rothenberg). Nor should I forget the extraordinary stimulation I received from a year at the Center for Advanced Study in the Behavioral Sciences in Palo Alto.

In some places, municipal gas networks successfully opposed electrification; elsewhere Britain built a multiplicity of power networks, each with its own voltage arrangements and hardware. Later improvements only added to the menu. To this day, British buyers of electrical appliances must deal with a diversity o f plugs and outlets, and customers pay shopkeepers to ready equipment for use. The British economy grew in these new branches as it had in the old—like Topsy. This marriage o f science and technique opened an era that Simon Kuznets called "modern economic growth." It was not only the ex14 T H E WEALTH OF K N O W L E D G E 285 traordinary cluster of innovations that made the Second Industrial Rev­ olution so important—the use o f liquid and gaseous fuels in internal combustion engines, the distribution o f energy and power via electric current, the systematic transformation o f matter, improved communi­ cations (telephone and radio), the invention of machines driven by the new sources of power (motor vehicles and domestic appliances).


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The Empathic Civilization: The Race to Global Consciousness in a World in Crisis by Jeremy Rifkin

agricultural Revolution, Albert Einstein, animal electricity, back-to-the-land, British Empire, carbon footprint, collaborative economy, death of newspapers, delayed gratification, distributed generation, en.wikipedia.org, energy security, feminist movement, global village, hedonic treadmill, hydrogen economy, illegal immigration, income inequality, income per capita, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, Mahatma Gandhi, Marshall McLuhan, means of production, megacity, meta analysis, meta-analysis, Milgram experiment, Nelson Mandela, new economy, New Urbanism, Norbert Wiener, off grid, out of africa, Peace of Westphalia, peak oil, peer-to-peer, planetary scale, scientific worldview, Simon Kuznets, Skype, smart grid, smart meter, social intelligence, supply-chain management, surplus humans, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, transaction costs, upwardly mobile, uranium enrichment, working poor, World Values Survey

It does not, however, distinguish between economic activity that actually improves the quality of life of the society and negative economic activity that takes away from it. Every type of economic activity is calculated in the GDP, including the building of more prisons, enlarging the police force, military spending, spending for cleaning up pollution, increased health-care costs resulting from cigarette smoking, alcohol, and obesity, as well as the advertising spent to convince people to smoke and drink more or eat processed and fatty fast food. Simon Kuznets, the man who invented GDP, warned in his first report to the U.S. Congress in 1934 that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”38 Thirty years later Kuznets addressed the subject of GDP’s inherent limitations even more strongly writing that “[d]istinctions must be kept in mind between quantity and quality of growth. . . . Goals for ‘more’ growth should specify more growth of what and for what.”39 A number of attempts have been made over the years to come up with a suitable alternative to GDP.


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Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, Black Swan, Bonfire of the Vanities, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, correlation does not imply causation, creative destruction, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, decarbonisation, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, germ theory of disease, Gini coefficient, Hans Rosling, hedonic treadmill, helicopter parent, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, life extension, long peace, longitudinal study, Louis Pasteur, Martin Wolf, mass incarceration, meta analysis, meta-analysis, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, Nelson Mandela, New Journalism, Norman Mailer, nuclear winter, obamacare, open economy, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, precision agriculture, prediction markets, purchasing power parity, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, sovereign wealth fund, stem cell, Stephen Hawking, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, technological singularity, Ted Kaczynski, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

In the absence of an Income Distribution Authority that parcels out identical shares, some people are bound to take greater advantage of the new opportunities than others, whether by luck, skill, or effort, and they will reap disproportionate rewards. An increase in relative inequality (measured by the Gini or income shares) is not mathematically necessary, but it is highly likely. According to a famous conjecture by the economist Simon Kuznets, as countries get richer they should get less equal, because some people leave farming for higher-paying lines of work while the rest stay in rural squalor. But eventually a rising tide lifts all the boats. As more of the population gets swept into the modern economy, inequality should decline, tracing out an inverted U. This hypothetical arc of inequality over time is called the Kuznets curve.24 In the preceding chapter we saw hints of a Kuznets curve for inequality between countries.


Growth: From Microorganisms to Megacities by Vaclav Smil

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, agricultural Revolution, air freight, American Society of Civil Engineers: Report Card, autonomous vehicles, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Bretton Woods, British Empire, business cycle, colonial rule, complexity theory, coronavirus, decarbonisation, deindustrialization, dematerialisation, demographic dividend, demographic transition, Deng Xiaoping, disruptive innovation, Dissolution of the Soviet Union, endogenous growth, energy transition, epigenetics, happiness index / gross national happiness, hydraulic fracturing, hydrogen economy, Hyperloop, illegal immigration, income inequality, income per capita, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, Isaac Newton, James Watt: steam engine, knowledge economy, labor-force participation, Law of Accelerating Returns, longitudinal study, mandelbrot fractal, market bubble, mass immigration, McMansion, megacity, megastructure, meta analysis, meta-analysis, microbiome, moral hazard, Network effects, new economy, New Urbanism, old age dependency ratio, optical character recognition, out of africa, peak oil, Pearl River Delta, phenotype, Pierre-Simon Laplace, planetary scale, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, random walk, Ray Kurzweil, Report Card for America’s Infrastructure, Republic of Letters, rolodex, Silicon Valley, Simon Kuznets, South China Sea, technoutopianism, the market place, The Rise and Fall of American Growth, total factor productivity, trade liberalization, trade route, urban sprawl, Vilfredo Pareto, yield curve

Its oft-repeated definition seems straightforward: GDP expresses the monetary value of all final goods and services that are produced or provided within the borders of a country during a specified period of time (monthly or quarterly in national reports, per year for international comparisons). But measuring GDP growth, and hence ascertaining its disappointing or satisfactory rates, is an inherently difficult matter and one whose systematic practice is quite recent. Its origins go back to the 1930s when Simon Kuznets was asked by the US Congress to estimate the country’s national income (Kuznets 1934). Its scope was defined by John Maynard Keynes, the measure became a key tool for the international financial institutions set up by the Bretton Woods agreement in 1944, and it was widely applied for the first time to the growing post-WWII economies (Coyle 2014). Before too long it became obvious that, like every aggregate measure, GDP has many drawbacks—but despite suggested adjustments and proposals for alternative accounts, it has become only more entrenched as the dominant yardstick for appraising the achievements and assessing the growth of national economies.


George Marshall: Defender of the Republic by David L. Roll

anti-communist, British Empire, Charles Lindbergh, David Brooks, Defenestration of Prague, Donald Trump, European colonialism, fear of failure, invisible hand, MITM: man-in-the-middle, Monroe Doctrine, mutually assured destruction, one-China policy, one-state solution, Ralph Waldo Emerson, Simon Kuznets, South China Sea, Steve Jobs, trade liberalization, Works Progress Administration, yellow journalism

Army Eighth Air Force bombed railroad yards near Rouen, the first attack by American bombers on Nazi-occupied Europe. This modest success fueled the hopes and ambitions of airpower advocates. By mid-September, Marshall signed off on a recommendation to expand the number of army air groups from 115 to 273, an aspirational goal that prevailed for the rest of the war.7 Meanwhile, economists working under Simon Kuznets and Robert R. Nathan at the War Production Board circulated a 140-page report, claiming that it was not feasible for the American economy to expand fast enough to supply an army of more than 100 divisions by the end of 1943 and at the same time meet the needs of the navy, the army air force, the civilian workforce, and the British and Soviet allies who were relying on lend-lease aid. The American economy was strong but not that strong, they concluded.


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Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

Airbnb, Akira Okazaki, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, Donald Trump, double entry bookkeeping, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, fundamental attribution error, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, Naomi Klein, new economy, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, pink-collar, plutocrats, Plutocrats, positional goods, profit maximization, profit motive, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, transaction costs, transatlantic slave trade, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

The figures are from the IMF and World Bank, in 2010. Gregory Clark (2009) argues that Maddison’s figure of a little over a dollar a day in 1800 is too low for subsistence. 5. “World,” CIA World Factbook (accessedApril 10, 2013). 6. The economic historian Stefano Fenoaltea and the economist Philipp Lepenies have both pointed out to me recently that for short-run reasons of policy at the time, the concept of national product used by Simon Kuznets, the deviser of the modern program of income measurement, and eventually by Maddison, did not go beyond trading figures, that is, what people could buy. Homework is mostly ignored. It is a major error for the long run (as Kuznets and other students of the matter realized), since production in the home of, say, made clothing and processed food was a large part of consumption in earlier times, as was at all times the care industry for children, husbands, and parents (as the economist Nancy Folbre has persuasively argued).